Employment Rights Bill

Baroness Fox of Buckley Excerpts

Committee stage
Tuesday 24th June 2025 Lords Chamber

[Baroness Verma (Con)]

My Lords, I agree with almost everything that my noble friend said. When I was growing up, my father, who was in business, suffered the three-day week, and I understand the impact it had on his business and many like his. I also understand that productivity needs to be improved and increased. We need to look at what is happening across the world to be competitive enough.

I know that the Minister, the noble Lord, Lord Leong, has a business and understands business. If he were sitting on this side of the Chamber, I suspect that he would be arguing in the same vein as we are. It would be right and proper not to shirk away from proper impact assessments and proper comparative assessments of what is happening across the world, because we all want a competitive country where we are leading at the helm. Denying and disagreeing just for the sake of denying and disagreeing does not do this debate any good.

[Baroness Fox of Buckley (Non-Afl)]

My Lords, unusually, I completely agree with the remarks of the noble Lord, Lord Deben; he and I are both surprised by that. That is not because I am a business owner—that has never been my shtick—but because I am worried about the unintended consequences of the Bill. I too simply want an opportunity to check—and if I am wrong, that is fine.

This group of amendments is very important because it will give the Government a chance to think again, to assess and to reflect. It does not have to be a U-turn; it can straightforwardly be something that is accepted at this point in the Bill that would then mean that those of us who are nervous about the Bill’s consequences can be proved right or wrong.

I am particularly concerned about the impact the Bill will have on productivity, and Amendment 311 is therefore key. I am concerned that the Bill is not doing what it says on the tin and will have a diametrically negative impact on workers’ rights, jobs and wages. I am interested in Amendment 312, which simply asks for real wage impact reporting.

Of course, the big amendment that would cover all the things that have been argued for so far is Amendment 319, which calls for an impact assessment of the regulatory burden of the Bill on businesses. In the past, people who have complained about overregulation have been considered to be on the right of politics—the idea is that those people are so irresponsible that they do not want any regulations and are prepared to take risks. I have never understood it like that at all.

I was therefore delighted to find that I agreed with the Government and the Prime Minister, Keir Starmer, when he made some tub-thumping speeches about the problems of

“the regulators, the blockers and bureaucrats”

stopping investment and growth. He called them an “alliance of naysayers”, which I thought was good, because I have always been worried about this. I am not from the Tory fold, but that goes along with what I thought. I was genuinely excited that the Labour Government were embracing this way of understanding what can get in the way of economic development and growth, which is necessary for workers to have jobs, wages and rights under an industrial policy that we are hearing about today—all the infrastructure things.

Last December, the Prime Minister infamously blamed Britain’s sluggish growth on

“people in Whitehall … comfortable in the tepid bath of managed decline”.

As we have been going through the Bill, I have felt like I am in the tepid bath of managed decline at the heart of Whitehall and Westminster. Therefore, I urge the government representatives here to remember their own Prime Minister’s words when deciding how they should approach the Bill, rather than just being partisan.

Between 2015 and 2023, the Conservative Government set themselves the target of a £19 billion reduction in business costs through deregulation. Instead, the Regulatory Policy Committee watchdog calculated that even exempting most Covid regulation, the regulatory burden increased by £18.4 billion in that period. I am saying this because people keep declaring that they are going to tear up the regulations getting in the way of growth, industrial capacity and so on, and then, the next minute, unintentionally, regulations grow. The Bill is so jam-packed with regulations that workers’ rights do not stand a chance of breathing.

One of the fears I have about the Bill, which I have raised in a number of amendments and which I hope Amendment 319 will address, is that it is a recipe for huge amounts of lawfare. Day one rights and protection from unfair dismissal both sound progressive and admirable, but the Government’s own analysis predicts a 15% rise in employment tribunal claims. There are already huge backlogs of between 18 months to two years, even before the Bill is enacted, so there is a real threat of a litigious clogging up of the system. Of course it is important that employees are treated fairly. As I have argued throughout consideration of the Bill, I am not frightened of trade union and workers’ rights at all, but I am concerned about this growth, encouragement and incentivisation of the use of lawfare.

I have just read a fascinating report, which I will send to the Ministers, entitled The Equality Act isn’t Working: Equalities, Legislation and the Breakdown of Informal Civility in the Workplace, produced by the anti-racist, colourblind organisation Don’t Divide Us, which assesses the unintended consequences of the Equality Act. Nobody thought this would happen, but it has led to a real fractiousness in the workplace: people are suing each other, all sorts of things are going wrong, and, in many ways, it has clogged up the system. The last thing we need is the Bill adding to that burden, leading to lawfare and people taking matters even further by suing each other.

Either an impact assessment is going to show that some of the concerns raised are overhyped, or in some instances ideological or raised by nay-sayers; or the Government can take the opportunity to say, “We never intended the legislation to do this, but we have seen that in some areas, it needs to be tweaked to make sure that it is not over-regulatory, damaging workers’ rights and wages and so on, in which case we are prepared to be honest and hold our hands up”. That is the very least legislators should do when they introduce a law that is going to bring huge change the whole business and workplace arena.

[Lord Swire (Con)]

My Lords, as somebody who does business from time to time and tries to encourage business, not least through my deputy chairmanship of the Commonwealth Enterprise and Investment Council, which is trying to grow business right across the Commonwealth, it strikes me that the Bill comes at an unfortunate time. Of course, we should always look at regulation, and there will always be an argument about what is over-regulation and what is under-regulation. But at a time when so many jobs are threatened by AI, we should surely be looking at a low regulatory framework. I urge the Government to take this into consideration during any impact assessment.

The Minister knows about business. He is a businessman and has a successful business, and I too suspect that he identifies with many of the points we are raising, although he cannot say it. But it strikes me that, just at a time when people are very fearful about their future and the uncertainty of having a job at all, let alone when they get older, so they can raise a family, have a mortgage and so forth, we should be looking at ways to encourage businesses to employ more people. The noble Lord, Lord Deben, said that he saw every good reason not to employ more people. That is really bad news. If businesses are now saying it is simply not worth the candle, that will contribute to the unemployment that will surely follow as many of these jobs are replaced by AI anyway. So I urge the Government to look at that.

Equally, at a time when many countries around the world, not least in Asia, are spending much more money, time and effort on advanced mathematics and the other things you need nowadays for coding and so forth, we in this country seem to be lowering the standards, particularly in mathematics—dumbing down at a time when we should be raising up. So by all means, let us properly protect our workers, but let us not overregulate to the extent that we do not have any workers to look after or to regulate.

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

My Lords, I am grateful to every noble Lord for their contribution, and I have listened intently to each and every one of them. I thank noble Lords for their kind words about my previous business career.

We return to the important issue of impact assessments. I appreciate the continued efforts of the noble Lords, Lord Sharpe and Lord Hunt of Wirral, here. It will be no surprise to your Lordships’ House, given the number of separate debates—I think there have been about eight now—we have had on this topic, that the Government view these amendments as unnecessary. Let me recap. We have already published 27 impact assessments, available on GOV.UK, which have been updated where needed as policy has been added to the Bill during passage.

Academics at Warwick University, Oxford University, MIT and UCL all find a positive relationship between job satisfaction and productivity in their research. For example, Simon Deakin, professor of law at the University of Cambridge, said:

“The consensus on the economic impacts of labour laws is that, far from being harmful to growth, they contribute positively to productivity. Labour laws also help ensure that growth is more inclusive and that gains are distributed more widely across society”.


All this evidence is laid out in our impact assessment, which was developed in consultation with external experts. Business supports the view that this will be good for productivity. In a survey undertaken by the Institute of Public Policy, seven in 10 employers said that strengthened employment rights will boost productivity, compared to just 7% who disagreed, and six in 10 employers thought stronger employment rights would have a positive impact on business profitability, while fewer than two in 10 disagreed.

We have worked hand in hand with businesses, trade unions and civil society to understand the impacts of this Bill—

[Baroness Fox of Buckley (Non-Afl)]

There is no doubt that people who are happy at work are likely to contribute positively to the workplace. Nobody, I think, is arguing against that and wants miserable workers with no rights. However, what we are trying to explore is not whether people will have job satisfaction but whether they will have jobs. It is about the unintended consequences of the Bill that might mean that people are not employed; or, indeed, that new jobs are not created because productivity will not go up; or that it becomes too risky to employ, for example, young workers, and so on.

With all due respect to Warwick University’s academics—I went there and I know some of the people who wrote that research, and I am sure that they are happy in their workplace—the truth is that if some piece of legislation ended up unintentionally closing down Warwick University, they would not be happy and productivity would not go up. That is what we are concerned with. It is not a theoretical academic argument about how being happy at work makes you work harder—I know that. But if there is no work, then you are not going to be happy, you are not going to do any work and productivity will go down.

[Lord Leong (Lab)]

I thank the noble Baroness for that contribution. If she can be a bit patient, I have some more positive news for her.

We have worked hand in hand with businesses and trade unions, as I said earlier, to understand the impacts of the Bill on industry and will produce further analysis as required under the Better Regulation Framework. It is worth noting that more doors are opening than closing. In the first quarter of 2025, the UK saw 90,000 businesses created, up 2.8% on last year, while business closures fell by 4.4%. This Government are backing British businesses and British workers, and our Modern Industrial Strategy, published yesterday, is making that real. To give one example, we have boosted the British Business Bank’s capacity to £25.6 billion, unlocking billions for innovative firms, especially SMEs. For the first time, the British Business Bank will be able to take equity in fast-growing tech companies. This has never happened before. That is helping crowd in tens of billions of pounds more in private capital, fuelling growth, creating jobs and driving long-term prosperity. I hope that gives comfort to the noble Lord, Lord Deben.

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[Baroness Fox of Buckley (Non-Afl)]

My Lords, in a previous life, I used to work in further education with many young people who were non-traditionally successful. In more current times, I have worked on matters relating to prison reform and I am very interested in former prisoners gaining employment. In all the instances of working with young people who did not have traditional qualifications or were trying to get into work, or with former prisoners, you were in a situation where you were talking to local employers and asking them to take a punt—a risk—on people. You would say, “Look, the worst that can happen is that you try this person out, it doesn’t work out and no one’s lost anything, but actually I’ve got every faith they will be brilliant”, and so on and so forth. You had to say, “Take a risk”, and I am afraid that in all the responses from employers they are saying, whether we like it or not, that the Bill—if enacted as it is presently constituted —will mean they become risk averse and will not take risks on a former prisoner or a young person who is a bit of a scally. So it is key to assess social mobility.

In addition to that group of people, one of the key ways in which work contributes to social mobility is often through young entrepreneurs or young people who, again, might not be conventionally the kind of people who will pass the Civil Service exam, will not necessarily fit in as an ideal employee and might be slightly eccentric or risk-takers, but who will set up their own micro-business. We know that they are the kind of people who might well be successful, although sometimes they might not be.

Throughout the passage of the Bill, there have been a lot of amendments tabled about micro-businesses—not SMEs, as they are traditionally still quite large businesses whereas micro-businesses have around 20 staff, or even two, three or four. If you talk to young entrepreneurs—the sort of young men who drop out of college but set up semiconductor manufacturing organisations, like some people I know, a builders’ business or a small hairdressers’ business—they realise that many parts of the Bill, which I have opposed throughout, will affect them. They do not have huge HR departments, they are not lawyers and they do not know what they are going to do, but they will be held liable for swathes of regulatory rules mandated by the Bill about the way they run their micro-businesses.

Those people are part of the great success of social mobility. They start out and make a success of it, but now it might not be worth it. They are not always poor and impoverished people. It can be young people making good through small businesses.

If it is the case that this is scaremongering about the worst fears or people just being paranoid, fair enough. But this Labour Government, of all Governments, should want to assess whether the Bill inadvertently, not intentionally, damages social mobility via employment. I therefore urge the Minister to accept this harmless but important amendment.

[Baroness Cash (Con)]

My Lords, I support the amendment tabled by the noble Lord, Lord Sharpe, and the comments made by the noble Baroness, Lady Fox, who covered quite a few of the points I planned to make. I want to speak specifically about young people.

Speaking very recently in front of a committee, Employment Minister Alison McGovern said that

“the situation for young people is a big worry for me at the moment”

and that:

“A lot of our young people—nearly 1 million—are effectively on the scrap heap”.


Those are not words I would have chosen myself; they are her words to a cross-party committee.

We have heard a lot of statistics during today’s debates. I will just add a few more. There are 1 million people not in education, employment or training, which includes a lot of young people. In addition, we have massive numbers of people receiving sickness benefits. All these young people will be a risk for employers.

The Minister is quite right that there has been an uptick in new businesses starting, but there is a serious downturn in the number of jobs created; unemployment is rising year on year, month on month since this Government took power; and the tax rises in the Autumn Budget are beginning to really kick in. We have seen that in the written submissions by numerous business organisations to the Government, other groups and Peers in this Chamber, begging—pleading—with us all to make their case about the significant costs they are already facing due to the national insurance rises. We can see it in real time. This amendment is a request to monitor the situation and come back with an impact assessment on perhaps the most vulnerable people in our society.

To show that these young people really want to succeed and want to have an opportunity, I will read the Committee a couple more numbers that the Minister is probably already well aware of. Some 60% of young people under the age of 30 would love to start a business, 9% of them have done so and 18% more of them would like to do so this year. These are the most vulnerable young people in our society. They are our future, as our demographics are getting older, and we are going to become more and more reliant on the economy that they generate. I have said it before, and I will say it again and again in this Chamber: Governments do not create growth; businesses create growth. We are now looking to these young people to start businesses and take risks on employing others. I urge the Government to, at the very least, come back having monitored that there is no impact on them and no further impact on the loss of employment that could ensue.