Ministerial Code: Investigation of Potential Breach

Debate between Baroness Donaghy and Baroness Neville-Rolfe

Thursday 25th May 2023 Lords Chamber

[Baroness Neville-Rolfe (Con)]

I simply do not agree with the right reverend Prelate. The Prime Minister has been clear that professionalism, integrity and accountability are core values of the Government. A number of inquiries have been set up by the Prime Minister. He has moved quickly to set them up and to take steps when they have been completed. Most recently, he moved very quickly on the matter of the Home Secretary, which was causing a distraction earlier in the week. He consulted the independent adviser, who advised that on this occasion further investigation was not necessary, and the Prime Minister accepted that advice. As I said before, we need to be very careful to ensure that the Prime Minister has ultimate responsibility for the Ministerial Code. He reissued it in December when he came to power and he has made it clear that it is important that it is followed.

[Baroness Donaghy (Lab)]

Perhaps I can just ask for clarification from the noble Baroness. There was some discussion in 2018 about whether the Ministerial Code mandated Ministers to behave in a certain way. This related to compliance with international law. The noble Baroness will remember a certain Mr Brandon Lewis, who said in the House of Commons that he intended to break international law

“in a very specific and limited way”.—[Official Report, Commons, 8/9/20; col. 509.]

That led to the resignation of a top civil servant and of the noble and learned Lord, Lord Keen of Elie. However, it did not lead to the resignation of the then Attorney-General, who is the subject of this particular complaint. The young lady is not fit for high office in any case, but surely if the Court of Appeal says that the Ministerial Code does mandate compliance, how on earth can the Government justify any variation?

[Baroness Neville-Rolfe (Con)]

I was on the Back Benches when this important situation occurred in 2018, but I would say that the Ministerial Code is a matter for the Prime Minister and the Prime Minister’s judgment, as the noble Baroness said. I think she was trying to make a point about the current Home Secretary. However, I would say that we should allow the current Home Secretary to get on with her job. The distraction of the last week has been considerable. She is trying to do the right thing in a whole series of areas, from public order to immigration. She has apologised, expressed her regret on the matter of the speed awareness course and paid the fine for speeding. Some feel that that issue has been conflated and is a bit of a distraction. She needs to be given the opportunity to get on. The Prime Minister has looked into the matter and she has written at great length to explain the exact circumstances of it. You always end up looking at an individual case, as the noble Baroness did, but I am clear that this is the right approach.

Rt Hon Dominic Raab MP: Resignation Letter

Debate between Baroness Donaghy and Baroness Neville-Rolfe

Thursday 27th April 2023 Lords Chamber

[Baroness Neville-Rolfe (Con)]

I do not dare to speculate on what the thing in question was. The Civil Service has a fundamental principle of political impartiality so, in considering proposals, that is something they have to look at. If something is improper, then the good civil servant—I used to be one—will point that out to the Minister of the day, and it might be that that is what was meant. Obviously Ministers are advised by civil servants on matters of policy, and it is clear that civil servants sometimes disagree with Ministers.

[Baroness Donaghy (Lab)]

I once asked a senior civil servant who were their favourite Ministers to work with. In confidence, they said Nicholas Ridley and the noble Lord, Lord Mandelson—which in itself is an interesting combination. I asked why, and they said it was because you knew where you stood with them and they were decisive. I think that is the definition of a good Minister. I have never met a civil servant who was disloyal, but I have met people who say that they would rather not receive direct instructions via a spad and would rather speak to a Minister. I think that is not necessarily because of the quality of the spad, but because of the method of avoiding talking to civil servants. Does the Minister agree?

List of Ministers’ Interests and Ministerial Code

Debate between Baroness Donaghy and Baroness Neville-Rolfe

Tuesday 25th April 2023 Lords Chamber

[Baroness Neville-Rolfe (Con)]

The noble Lord asks why the register is not updated on a monthly basis in the same way as the register of interests that applies in our House and in the other place. It is important to understand that they are different. The list published by the independent adviser is a list: it is published every six months as the public endpoint of an ongoing process. Ministers’ interests are declared on appointment and on an ongoing basis to Permanent Secretaries, and are reviewed by the independent adviser. Any changes have to be notified in real time but, because of the nature of ministerial office, the number of new interests is normally fairly small at any point in time, so it makes sense to publish a new list every six months. There was a delay because of changes in government, which the noble Lord will be well aware of.

I started life as a civil servant and I have worked as a Minister with many brilliant civil servants, a view I know is shared by my colleagues. I believe in an independent Civil Service, and its fearless and impartial advice is vital to this country.

[Baroness Donaghy (Lab)]

My Lords, is it not true that the so-called independent adviser is still a creature of the Prime Minister? The Committee on Standards in Public Life made a number of recommendations to improve the situation, most of which were not adopted. Will the Government reconsider those recommendations from the committee and adopt them so that this position could be seen to be genuinely independent and not a creature of the Prime Minister?

[Baroness Neville-Rolfe (Con)]

The Government’s work on reforms to strengthen ethics and integrity in central government is now nearing conclusion and we hope to publish our response soon. There have been a number of reports, including Upholding Standards in Public Life, the recommendations of Sir Nigel Boardman’s report on supply chain finance, and PACAC’s fourth report, so we can look forward to a response.

Fuel Poverty

Debate between Baroness Donaghy and Baroness Neville-Rolfe

Tuesday 25th October 2016 Lords Chamber

[Baroness Donaghy]

To ask Her Majesty’s Government what is their estimate of the number of households currently in fuel poverty; and what action they intend to take to reduce that number.

[The Minister of State, Department for Business, Energy and Industrial Strategy (Baroness Neville-Rolfe) (Con)]

My Lords, the latest official statistics show that there are 2.38 million households living in fuel poverty in England. We are reforming the energy company obligation to improve the energy efficiency of the households that most need support. Combined with the support from the warm home discount, almost £1 billion a year will be spent on tackling fuel poverty from 2018. We also propose to raise the standards of energy efficiency in the private rented sector.

[Baroness Donaghy (Lab)]

I thank the Minister for her reply. She will know that the Prime Minister said:

“It’s just not right that two-thirds of energy customers are stuck on the most expensive tariffs”.

The Minister will also know that the figures she gave the House are a conservative estimate, because they do not include those who are in need of extra warmth because of old age or ill health. Could she elaborate on the Government’s intentions to achieve this improvement?

[Baroness Neville-Rolfe]

As the noble Baroness said, the Government are very focused on this issue. We are trying to improve the various schemes to focus them more on low-income and vulnerable people. We have a report from the Competition and Markets Authority looking at price, and at the key issue of pre-payment meters, which are extremely important for the poor and vulnerable—and which Lord Ezra, who used to ask questions on this subject, did so much to bring to everyone’s attention.

Trade Union Bill

Debate between Baroness Donaghy and Baroness Neville-Rolfe

Monday 25th April 2016 Lords Chamber

[Baroness Donaghy (Lab)]

My Lords, I am sure the noble Lord, Lord Leigh, forgot to declare in his contribution that he was the treasurer of the Conservative Party. I support my noble friend Lord Collins’s amendment to the amendment. Of course we support transparency but Amendment 1 adds another section, which in our view is completely unnecessary.

Many years ago I chaired the general political fund committee of—I think it was NALGO then, before Unison came about—and the amount of information given was extremely elaborate. There was an annual report and a magazine. There was absolutely no doubt about where the expenditure went, and I have no doubt that that information is still communicated.

I just wonder why this “Lord Leigh clause”, as I think I am going to call it, is really necessary. It seems to me that it is the thin end of a wedge and could be utilised in future. Amendment 1 adds an unnecessary burden to the unions. Without proposed new subsection (2E), it would still provide all the information that the Select Committee asked for.

[Baroness Neville-Rolfe]

My Lords, Amendment 2 to government Amendment 1 seeks to reduce the level of transparency on all expenditure from a union’s political fund. Of course, during debates in this House noble Lords have referred to unions supporting various campaigns, causes or organisations from their political funds that are not clearly linked to the categories of expenditure under Section 72(1) of the 1992 Act. As I explained, we are seeking to make things clear.

The noble Lord, Lord Collins, whose knowledge of this area has been extremely helpful during the passage of the Bill, asked about the Certification Officer’s view on what I think has rightly been named the “Lord Leigh amendment”. The Certification Officer acknowledged that this may mean some additional reporting for some unions. However, he welcomed the proportionate approach and clarity of the overall package, and supported the change. I am also extremely grateful to the noble Lord, Lord Burns, for his support, given all the expertise he developed during his splendid committee inquiry.

The noble Lord, Lord Stoneham, asked—as he always does—about burdens, a point on which he and I tend to agree. I will write to him but I think the one-in, two-out rule applies to business costs and therefore on a point of detail may not apply, but I will certainly check that and write to him. What I would say is that in this amendment we are trying to get away from the bureaucracy and detail of the individual recording of bus tickets. That has been the whole point.

We are not seeking changes to the political arrangements in relation to expenditure by the Conservative Party, for example, or changes in the Electoral Commission rules. We have brought in an amendment which I think improves things, and agree with my noble friend Lord Leigh that better transparency is required across all expenditure from political funds to enable union members to decide whether or not to contribute and, importantly, that it does so in a clear and proportionate way. I believe that the package of amendments I have set out today achieves that.

Trade Union Bill

Debate between Baroness Donaghy and Baroness Neville-Rolfe

Thursday 25th February 2016 Lords Chamber

[Baroness Donaghy]

My Lords, I have one point about the impact assessment that relates to the previous issue, but I think it better if I write to the Minister rather than take up a lot of time. I am quite concerned that a market failure argument is used. I understand about union behaviour and imperfect information between employees and trade unions, but I do not understand the point about imperfect information between employers and trade unions. That is not the role of the Certification Officer. If it is intended that it will be in future, it puts the whole industrial relations scene on a very different level, but I will drop the Minister a line about my concern.

[Baroness Neville-Rolfe]

I look forward to receiving the noble Baroness’s letter.

[Baroness Donaghy]

I shall speak also to Amendments 102, 103 and 105. Amendment 101 goes over some of the ground that we have already covered. It would restrict the power to require the production of documents to the Certification Officer and his or her staff. Amendment 102 would require a complaint to be made by a union member and for the Certification Officer reasonably to believe there was evidence of a breach of an obligation before he or she initiated an investigation. Amendment 103 would require a person investigating a breach of an obligation by a union to be a member of the staff of the Certification Officer and not “other persons” as vaguely written in the Bill. Amendment 105 would require the interim report of the person investigating a breach of an obligation by a union to be sent to the union concerned, which is a new point and, if anything, represents the one improvement in the whole area of the schedule.

The concern is that the Certification Officer and inspectors will have wide-ranging powers to demand the production of union documents and access to membership records, members’ names and addresses and correspondence between a member and their union, even though no union member has raised a complaint about the union’s practices. I am also seriously concerned that the evidence threshold that needs to be met before these wide-ranging powers are triggered is very low. The CO will be able to demand access to documents if he or she thinks there is good reason to do so. The CO would not need to have substantial evidence demonstrating that the union has breached any statutory obligations. Requests for union documentation would not be limited to union head offices, and the CO and any appointed inspectors would also be able to approach branch offices and regional offices to request documents.

These powers represent a serious violation of union members’ rights to privacy, as protected by Article 6 of the European Convention on Human Rights, as has already been said. Many individuals do not want their employer or, indeed, the state to know that they are a member of a union for fear of victimisation or blacklisting which, as my noble friend Lord Mendelsohn said, unfortunately still exists today. The Bill may therefore deter individuals joining unions and benefiting from effective representation at work. This will undermine the right to freedom of association. I know that the Minister has said that this information will be confidential to the Certification Officer, but that is not necessarily the perception that will be held by individual union members, who will fear that the information may get out to the public, particularly if they find out that the complaint or investigation has been initiated by a national newspaper or a political party. Perceptions are extremely important on that. It is not surprising that, as the noble Lord, Lord Ouseley, has already referred to, the ILO committee of experts has called on the Government to account for their proposal to increase the powers of the Certification Officer.

I hope the Minister will understand that it is quite important from the point of view of the standing of the Certification Officer that any complaints are confined to union members. I do not think there is a case for any external inquiries. If anyone in the public thinks that there is some illegality going on in the unions, there are different ways of investigating that which have nothing to do with employment relations. I beg to move.

--- Later in debate ---

[Baroness Neville-Rolfe]

My Lords, I thank noble Lords for these amendments. In considering them it is important to reflect first on the approach and safeguards that already operate with regard to the Certification Officer’s current power to investigate a union’s financial affairs and how they will continue to operate after these reforms are adopted. In response to the final point that was made, I agree that impartiality is critical. As with all regulators, that is an absolutely essential point and it is possible to get into a terrible mess, so I assure the House that the Certification Officer’s impartiality will continue.

As I have already said, the Certification Officer will continue to be under no obligation to undertake an investigation. They will remain independent, subject to delivering against the statutory objectives. His or her judgments will remain subject to appeal, where he can be challenged through an independent process for the conclusions he or she reaches. In exercising the current powers to appoint an inspector, the Certification Officer needs to be satisfied that there were circumstances suggesting a breach. That will continue after the reforms.

When we reflect on how the current system works we see that the Certification Officer has acted proportionately and only when satisfied that the relevant tests have been met. There is no reason to believe that they or their successors would act any differently in future, and there is certainly no evidence to suggest that a more onerous test for these powers is necessary.

It is also important to reflect on the nature of the investigatory powers which, as I have said, are very similar to the Certification Officer’s long-standing powers to investigate financial affairs. That includes the power to appoint an inspector who is not a member of the officer’s staff. That approach has been in place for a long time, so we are continuing with that long-standing approach.

Before I comment on one or two of the other amendments I will just respond to the point made by the noble Baroness, Lady Donaghy, on the potential breach of Article 8. The investigatory powers will give the Certification Officer access to members’ information. Access to such information may be needed to determine whether there has been a breach of relevant obligations—I am sure the noble Baroness would agree with that. I made two key points in response to the question on data and data confidentiality, which she picked up in her comments about the need for confidentiality and to obey the Data Protection Act—although I note her comment about how people might feel, which is always a fair point. However, the key issue is that the Certification Officer will be under a statutory duty to act consistently with rights conferred by the European Convention on Human Rights, including Article 8, so we have to set it up in a way that does that.

Amendments 101 and 103 aim to restrict inspection activities and Amendments 102 and 104 place controls on the appointment of inspectors, which the noble Lord, Lord Oates, was concerned about. We envisage that most inspections will be carried out by the Certification Officer or their staff. However, the reforms allow the Certification Officer to bring in additional resources, as the noble Lord said, or, perhaps more importantly, specialist knowledge should an investigation prove very technical or complex. This approach is not new. This flexibility has been used rarely, specifically to supplement auditing skills in relation to investigations into a union’s financial affairs, and it seems appropriate to bring in such skills. It will give the Certification Officer flexibility in choosing an appropriate inspector to deal with investigations swiftly and effectively. This is common among other regulators, including smaller ones. For example, the Office of the Regulator of Community Interest Companies and the Charity Commission can appoint outside people to conduct or help with an inquiry if that makes sense.

Finally, Amendment 105 allows unions the opportunity to see an inspector’s interim or other reports before a final report is compiled. I am not sure that there has been much debate about this. I believe that this would be unhelpful for unions. Any investigation is likely to give a union several chances to state its case to the inspector before a report is finalised. Furthermore, requiring the inspector to provide interim or other copies of his or her report will serve only to slow down the inspection process.

I assure the Committee that the law will continue to require that a union must always have an opportunity to make representations to the Certification Officer before any enforcement decision is made following an investigation. That seems to me very important. As we have discussed, a union also has a right of appeal against any decision to issue an enforcement order.

I hope that some of that explanation is helpful and that the noble Baroness will feel able to withdraw the amendment.

[Baroness Donaghy]

I could make a number of points. I think the Minister has underestimated the issue of the perception of the individual member who finds himself or herself in the middle of all this. I think that just having an assurance that there will be confidentiality and that the objectivity of the Certification Officer will remain the same will be a bit more difficult to accept in the context that 99.5% of the cost of the levy will be met by the trade unions.

Incidentally, I may well have got that figure wrong. Apparently I was wrong in referring earlier to 26p. I should have referred to a cost of £26 per employer organisation, so I put that on the record and apologise. However, I am certain that 99.5% of the levy cost will go to the trade unions. That does not look like a fair allocation and, in the context of that unfairness, it will be difficult for people to think that they will be treated fairly.

In the light of the time of day and the fact that we have given this matter a good airing, I beg leave to withdraw my amendment.

--- Later in debate ---

[Baroness Neville-Rolfe]

I do not think that that is right, but perhaps I can write and clarify in the follow-up if I do not receive advice quickly.

On small unions, details of the application of financial penalties, including the maximum level of penalties available to the Certification Officer, will be set out in regulations. Of course, they will be subject to the affirmative resolution procedure, as we discussed. In setting maximum amounts in the regulations it will be possible to take into account the type of breach and the size of the union.

I will write to confirm that the answer to the noble Lord’s point is no and that it requires an application to the court.

[Baroness Donaghy]

I thank the noble Baroness for her reply—I think. The best thing for me to do at this stage is say that I will look at Hansard, because I am not entirely clear. The negatives have become so negative that I am not quite sure how many stages it has got through and what it actually means. At this stage, I will withdraw the amendment, but I may follow it up if I do not understand the reply.

[Baroness Neville-Rolfe]

As this is a technical point where there does not seem to be much difference between us, we can always have a discussion on what it means and involve the officials who drafted the provisions, who I think were trying to repeat an existing provision.

[Baroness Donaghy]

I beg leave to withdraw the amendment.

--- Later in debate ---

[Baroness Neville-Rolfe]

My Lords, government is not always logical, and while some regulators receive public funding many do not. In fact, increasingly few regulatory areas are paid for by government. We do not think it appropriate for the costs to fall on the taxpayer. We are going to set out our proposals. The clause requires consultation with relevant organisations, such as the TUC and ACAS, before making regulations. We will ensure that there is consultation, so we can achieve a levy that is proportionate and appropriate. I would envisage a consultation document, which can go to those concerned; that is always the sort of approach I favour in the areas where I have responsibility. An impact assessment will be published, as has been said, and the normal process is to publish that with the draft regulations, which of course will come before this House in due course, setting out the arrangements for the levy. We should also ensure that ACAS and the trade unions have a reasonable period of time in which to consider the detailed proposals, particularly in the light of the discussion taking place today.

This legislation is about trade union reform, and I do not think that the point about political parties, which I know is made with great vehemence by the noble Lord, Lord Oates, is a matter for this legislation.

It is important—and perhaps I can explain technically—that the Bill does not prescribe the amount. The Certification Officer needs to decide each year how much he or she needs to be charging to cover the cost of performing the functions for that year, adhering to the framework that is prescribed in regulations made under the Bill. It is common for legislation that introduces a levy or fees to require that the detail be set either in regulations or by the relevant regulator. This is standard practice and recognises that it is simply not possible to be too prescriptive in the primary legislation.

It is right that we do not attempt to limit the flexibility the Bill currently provides to apply one or more of these parameters until there has been proper statutory consultation. Let me give an example. We recognise that trade unions can vary greatly in size. Smaller unions and employer associations may require less of the Certification Officer’s time and resources, as my noble friend Lord Balfe said. We want the scope to be able to consider whether those who use more of the officer’s time should bear more of the cost, thereby reducing the amount of levy payable by smaller organisations. My noble friend Lord Balfe asked me to look at a point about political funds, and we can certainly consider that as part of the consultation. We will consider very carefully during the statutory consultation whether the amount of levy payable should be proportionate to the trade union or employer association’s income. It should take into account affordability for the smallest unions.

Amendments 118 to 121 seek to change that magic word, which the noble Lord, Lord Mendelsohn, knows so well, “may” to “must”, so that all the potential criteria in the Bill would have to be applied in setting the framework for the levy—I am afraid my sore throat is getting going again. That limits the flexibility to ensure that the power operates effectively, which is particularly important as we have a statutory duty first to consult.

On Amendment 121A, I appreciate noble Lords’ desire for there to be some control over the amount, but there are safeguards that act to control the amount of investigation that the Certification Officer could undertake. Most importantly, he will be able to investigate only where there is good reason to do so. Third parties have no statutory right to complain. The changes allow the Certification Officer to investigate in respect of information he receives that may be from a third party.

The officer has had the power to launch investigations into a union’s financial affairs for many years, and it has not been suggested that it has been used disproportionately. He or she will also be required to report annually on the amount levied and how it was determined. These reports are laid before both Houses. By way of further safeguards: the amount of the levy will be limited to cost recovery; unions and employer associations will be consulted before the framework for the levy is determined; and regulations to enable the Certification Officer to charge the levy will be subject to the affirmative procedure, allowing a full debate in Parliament, which I much look forward to. In these circumstances, I ask the noble Baroness to withdraw her amendment.

[Baroness Donaghy]

I am glad the Minister’s voice just about held out. I appreciate the points that she made. I will say only that this is creating a power to create a levy, with which I do not agree. It is increasing the costs of the whole exercise and then cynically passing them on to the trade unions. I say “the trade unions” advisedly because, although the Minister said that this will affect employers as well, I do not think I got my figures wrong when I said that they will be paying 0.5% and the unions will pay 99.5%—I am grateful to the Minister for nodding on that.

I do not see that my may/must amendments limit flexibility. I see the transparency which has been promoted by the Front Bench of the Government through all four days in Committee. It is important that people know where they stand. They will not know where they stand because the flesh will appear in the statutory instrument. Yet again we have important policy items waiting for a statutory instrument. It is not good enough just to say that there will be an impact assessment to accompany that statutory instrument; we all know that there are attempts to downgrade our powers to properly debate statutory instruments. Time will pass and everyone will look totally amazed when this side leaps up and down with indignation about the content of that statutory instrument. I give notice now that I probably will be leaping up and down.

I just hope, again, that the consultation will be adequate and that all relevant parties will be consulted, but I strongly believe that it is a very poor change for the role of the Certification Officer to become a tax collector as well as adjudicator, investigator and all the other things that he, or in future she, may have to do. It is a backward step and I very much regret it. In the circumstances, though, I beg leave to withdraw my amendment.

Trade Union Bill

Debate between Baroness Donaghy and Baroness Neville-Rolfe

Wednesday 10th February 2016 Lords Chamber

[Baroness Neville-Rolfe]

My Lords, I should like to look into that and revert, either under a later amendment or in writing, on the point that has been raised.

[Baroness Donaghy]

I thank the Minister for her response and echo what she said about taking every opportunity to avoid disruption. I thought that that was the purpose of my amendment—that employers and trade unions can take advantage of certain opportunities for two-way communication to accept the inevitable but minimise damage. I entirely sympathise with the point made by the noble Lord, Lord Callanan, about disruption to the public. It is very difficult to have any strike action—you could argue that there was no point in such action—that does not disrupt anybody. We are all here hoping that we can avoid strike action. The suspicion that some of us have is that the purpose of the Bill is to prevent strike action. I am trying to find a small shaft of light to recognise that management and unions find themselves in a difficult position, after a clear mandate, and give them every opportunity of arranging the date so that it is mutually beneficial—if there is such a thing—during a period of strike action. In the light of the circumstances, I beg leave to withdraw the amendment.

Enterprise Bill [HL]

Debate between Baroness Donaghy and Baroness Neville-Rolfe

Wednesday 4th November 2015 Grand Committee

[Baroness Hayter of Kentish Town]

My Lords, this is the amendment that the Government really ought to grab hold of if they want to achieve their stated objective of stopping big payments to the highest paid rather than to the longest serving of their own employees. It is this amendment which would prevent the longer serving, albeit lower earning, workers from being caught. As my noble friend has said, it is so unfair because these strain payments do not even go to the individual, it is an actuarial change from what is at the moment available from their current employer to the pension scheme. However, it will reduce the amount that they are able to take as their pay.

We have already heard of examples from my noble friend and we are talking about this becoming a bigger problem. We could have someone with 35 years’ service earning perhaps £30,000, but because of the later retirement age now of 65, a person on that salary will undoubtedly hit the cap and not be able to take a well-earned and justified amount of money. It can also happen with much smaller sums in terms of long service. This is going to hit older workers, and to me it feels discriminatory towards them. I do not know whether any challenges will be made on this basis, but they are the people who will be caught—it is not by virtue of their pay, but by virtue of their age.

I will add one more point. As the Bill stands at the moment, it will affect those who, under the present arrangements, can take a non-reduced pension on compassionate grounds. I assume that that is also going to go out of the window. This is an absolutely crux amendment. Solve this on pensions and we will have gone a long way to solving what is between us on this matter.

[Baroness Neville-Rolfe]

I thank the noble Baroness for her amendment. It is late but I will try to respond because the noble Baroness and her noble friend have both made important points about a key area. The amendment seeks to exclude any pension top-up element from the scope of a cap on exit payments. The Government do not believe that such an exclusion would be desirable for reasons that I will explain.

Let me be clear: the Government’s proposals, as I said at Second Reading, do not involve taking away people’s group pension rights, so the cap will not affect in any way an individual’s right to their earned pension, nor does it engage the 25-year guarantee on pension rights. It is focused on limiting the amount that a public sector worker can receive from an employer when leaving employment. The cap is intended to cover all the various types of payment that an employer may make, and the Government think it right that it should include payments made to a pension scheme to fund early access to that payment, otherwise you will have a different problem.

Noble Lords will be aware that where an individual takes early retirement, pension payments are normally reduced to reflect the expectation that they will be paid for longer, and the amount of the reduction is calculated by the scheme actuary to ensure that the consequences for the scheme and for the individual are cost-neutral. In cases where the individual is retiring early on the basis of ill-health or redundancy, certain pension and compensation schemes may allow an employer to make a payment into the pension scheme to buy out any reduction so that the individual can have immediate access to the unreduced pension. These additional costs to the scheme, those of providing a pension of greater value than the individual would otherwise be entitled to, are met by the employer and, ultimately of course, by the taxpayer.

I can make it clear that these provisions do not alter the position in relation to early retirement for ill-health and injury, but I am not sure about compassion, so I will have to look into that. As I alluded to earlier, it is only where such a payment forms part of a redundancy package in place of or additional to a lump sum redundancy payment that it will be within the scope of the cap. The Government do not accept that as a rationale for excluding this type of payment from the cap. Payments of this type are sometimes some of the most expensive and place the greatest burden on employers and taxpayers. I would also like to reassure noble Lords that the Government believe that redundancy packages should still retain flexibility to allow early access to a pension where employers have the ability to top up an employee’s pension. These proposals will simply ensure that any top-up is within the limits of the cap, and Schedule 4 to the Bill gives a power whereby the employer can still make a payment into the pension scheme to reduce the actuarial reduction that would otherwise have been made.

I note the points that have been made and I understand the emotion behind and importance of this issue. It is serious, but the Government have brought forward a scheme. It involves picking up these extra payments that are made to top up pensions, and I hope that, in the interests of time, the noble Baroness will be prepared to withdraw her amendment.

[Baroness Donaghy]

I thank the Minister for her response, but she has not convinced me by one iota. However, in view of the time, I beg leave to withdraw the amendment.

Small Business, Enterprise and Employment Bill

Debate between Baroness Donaghy and Baroness Neville-Rolfe

Monday 26th January 2015 Grand Committee

[Baroness Neville-Rolfe]

I thank the noble Lord for that further clarification. There is a lot of common ground here. We need to address certain issues and, clearly, we are all keen to stamp out exploitation.

[Baroness Donaghy]

My Lords, I am very grateful to noble Lords who have taken part in the debate. I thank the noble Lord, Lord Storey, for his comments. Of course, there is no intention to interfere with the perfectly well known volunteer system or with anything to do with sandwich courses in universities. I think we all know what we mean when we talk about these cases, but we are not very strong on analysis, and we need to pin that down.

My noble friends have certainly pointed to the exploitation issue—that somebody can be very willing because of the future opportunities that an internship can give them. Because their family can support them they might grit their teeth and say, “Well, let’s put up with this for a few months, because it will open doors that otherwise will never be opened”. It is still exploitation. The vast majority of people that I am talking about do not even get through the front door; they do not even get through the door to enable themselves to become disgruntled, so that they can go for enforcement or to various websites to ask about it. They are outside this semi-privileged circle. That is the issue that I want to pinpoint.

[Baroness Neville-Rolfe]

It certainly has not been my experience—and I used to work outside London—that all internships are a gilded circle. Internships and work experience are quite broadly based in the cities of Britain, which is a very good thing. I am keen that that should continue in big firms and small firms, in the public sector and in the voluntary sector. We have to be careful that we do not take steps which, with the best will in the world, have a perverse effect, so it is right that we should debate these issues. Like the noble Baroness, I have a lot of passion to make these things work and to encourage more opportunities for more people.

[Baroness Donaghy]

I thank the Minister for that comment. I think that we are not too far apart on the need to identify and be more objective about what we are talking about. I am referring all the time in this amendment to unpaid internships. As I have said, I think that there is an element of exploitation. Perhaps any report or further discussion that we might have could look at some time limits that are acceptable. I am grateful for the Minister’s comprehensive reply. I will look at that in more detail but at this stage beg leave to withdraw the amendment.

--- Later in debate ---

[Baroness Donaghy]

I want to say a brief word about this because I must admit that I have a personal dislike of the phrase “zero-hours contracts”. Casual labour has existed for a very long time. It has had different names and different fashions have been followed. I think we are all aiming to ensure that while we do not completely get rid of a flexible labour market, basic employment rights are available to those who have spent any significant length of time in a particular job. We know what we are talking about here, do we not? There is the story of the burger operative—or whatever they are called—who was told that he was not working when not serving a customer. His pay was therefore suspended so that he was receiving pay only when he was serving customers. The argument then was, “Of course, the franchisee went beyond his remit”. That is a marvellous excuse made by some national brands; they can blame a local manager for doing something when the tone has probably been set at national level.

This could be extended to all sorts of other areas by saying, “You are not actually working”. I know that the noble Lord, Lord Stoneham of Droxford, used to work for the National Union of Railwaymen. I wonder if the same would apply to a train driver who is not driving his train while stopped at a signal, and therefore should perhaps not be paid until such time as the signal is green. That was how ridiculous some of these practices were on the ground. To go back to the reality of the casual world of work, as we know it in this country, those practices are not really funny. They are quite serious examples of exploitation so I make no apology for supporting my noble friend Lord Young on these amendments, if only to try to get to a situation where we are paring back all these gimmicky phrases and looking at people’s basic employment rights.

[Baroness Neville-Rolfe]

I thank the noble Lord, Lord Young, for these amendments and for the debate we have had on this part of the Bill, which went slightly wider than the amendments. I ought to say that Labour did nothing about zero-hours contracts for 13 years. The number of them went up by 75% between 2004 and 2009. What we have done is to carry out a review into these contracts, so that we can deal with any abuse. As a result, we are banning the type of contracts which mean that employees are not allowed to work for any other employer, while still allowing people such as students to benefit from the flexibility that they offer.

We introduced Clause 148 to deal with this mischief and I am glad to hear the noble Lord’s support for it and my noble friend Lord Stoneham’s perceptive analysis. The noble Baroness, Lady Donaghy, rightly tried to improve our English and not talk about zero-hours contracts. It may be that like one of the terms we were struggling with earlier, the term is an Americanism. Wikipedia does not give its origin but I will hunt it down.

At present, an individual subject to exclusivity terms in their zero-hours contract cannot seek work elsewhere, regardless of whether the employer offers only occasional, minimal, or even no hours of work. Exclusivity terms are unfair for the individual who, as a result, is prevented from boosting their income or building on their work experience. Frankly, it is also damaging to the economy because it prevents people from reaching their full employment potential.

As my noble friend Lady Harding made clear at Second Reading, from her own experience of running a supermarket in Yeovil, zero-hours contracts are an important element of a flexible, vibrant labour market, and they work for employers and individuals alike. I even heard the shadow Business Secretary agreeing that sometimes people quite like to use them. However, I think that we also agree that people working under such a contract must get a fair deal.

The ban on exclusivity terms in zero-hours contracts, as set out in the clause, is straightforward. From the moment the clause commences, individuals can simply ignore an exclusivity clause and work for another employer as well if they wish. There is no process, no admin and no need to discuss this with the employer—I am not sure that people understand this—and any attempt by the employer to stop a second or third arrangement would be unenforceable. This is a major change and a reduction in employer flexibility, but one that we believe is right.

Amendment 68ZU seeks to provide a route of redress for zero-hours workers who need to enforce their rights, allowing for regulations to set out the details. The clause already provides for an order-making power that will allow for this.

Amendment 68ZW seeks to make the use of that order-making power mandatory. However, given the fact that routes of redress will be delivered through the order-making power, I am sure that the Committee will agree that in this case the amendment is unnecessary. The Government will have to bring forward regulations; otherwise, the ban on exclusivity terms in zero-hours contracts will have no meaning. For this reason, I do not believe that we need to make this amendment. The regulations that will be possible under the order-making power will also be able to address the issue of redress that is covered in detail in Amendment 68ZAB; that is, that an employment tribunal will have the power to consider claims related to the exclusivity ban, including providing remedies to the individual and issuing penalties to the employer. The Government recently consulted on using the order-making power. We are currently finalising the details with a view to publishing the government response shortly on how we plan to tackle avoidance.

Amendment 68ZZ suggests that the definition of an exclusivity term is too narrow. However, the Government have looked at this and consider the description in new Section 27A(3) of the Employment Rights Act 1996, which will be inserted by Clause 148, to be sufficiently broad. It covers any provision in a zero-hours contract that prohibits working for others, as well as terms that require an individual to seek permission from their employer to do so.

I believe that our approach will deal sensibly and effectively with both avoidance of the ban and routes of redress for individuals on a zero-hours contract who suffer a detriment. I hope that on this basis the noble Lord will agree to withdraw the amendment.