Small Business, Enterprise and Employment Bill Debate
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Baroness Neville-Rolfe
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Small Business, Enterprise and Employment Bill
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The Parliamentary Under-Secretary of State, Department for Business, Innovation and Skills (Baroness Neville-Rolfe) (Con)
My Lords, these amendments relate to Clauses 122 and 123 which remove the requirement for face-to-face meetings in insolvency proceedings.
I am grateful to the noble Lord, Lord Stevenson, and my noble friends Lord Flight and Lord Leigh for their questions about when face-to-face meetings should be held and the position of small creditors. I have also met R3, the trade body representing insolvency practitioners, as I promised to do in Committee, and am grateful to it for the valuable insight that it provided.
After further consideration, the Government intend to expand the thresholds so that a face-to-face meeting may be requested by 10% of the total number of creditors or contributories, as well as 10% by the value of their claims, which was, of course, the Government’s original proposal. This would mean that on average three or four creditors could trigger a meeting in a liquidation case. Moreover, to account for the larger insolvency cases with lots of small creditors, a further threshold of an absolute number of 10 or more creditors or contributories—a third 10—has also been introduced.
I thank the Delegated Powers and Regulatory Reform Committee for its recommendations on this part of the Bill. We have listened to its concerns and moved the various thresholds to the face of the Bill so that they will appear in the Insolvency Act as amended. Any changes to these thresholds will also now be subject to the affirmative resolution procedure.
Before I sit down, I should like to comment on another insolvency issue raised in Committee by my noble friend Lord Flight. This was the temporary exemption from the scope of the no-win no-fee reforms in Part 2 of the Legal Aid, Sentencing and Punishment of Offenders Act 2012 for insolvency officeholders to bring civil proceedings. The Government have listened to the concerns raised in this House and elsewhere. As a result, we announced on 26 February that we would defer commencing the no-win no-fee reforms for proceedings brought by insolvency officeholders beyond April 2015.
I am most grateful for the input of noble Lords on all sides of the House and I hope they will agree that we have found a sensible solution on all these issues. I beg to move.
Lord Flight (Con)
My Lords, I thank the Minister for listening to the various concerns in this territory and for the government amendments. I am aware that the insolvency industry is comfortable with the legislation as it now stands. It understandably has the view that it hopes creditor meetings will not disappear as they can be extremely useful. However, a most satisfactory compromise has been achieved, for which I thank the Minister.
Baroness Neville-Rolfe
My Lords, I thank the noble Baroness, Lady Thornton, for her amendment and all her supporters, including Grazia magazine. I pay tribute to her tireless campaigning on gender equality. This is a very timely debate, following International Women’s Day on Sunday. I am pleased to confirm that it is the Government’s intention to accept the noble Baroness’s amendment, subject to changes that I am proposing by way of government Amendments 58ZZA and 58ZZB.
Before turning to the amendments, I remind the House of some key facts about the pay gap and the work that the Government have already been doing to close the gap and improve transparency. First, it is important not to lose sight of the fact that, according to ONS figures, the gender pay gap has fallen to its lowest level ever. It has been virtually eliminated among full-time workers under the age of 40, which is a more positive way of looking at the statistics. We are broadening the career aspirations of girls and young women by encouraging them to get into STEM-related careers through the Your Life campaign. Opening up these highly skilled areas ensures that women are less concentrated in sectors that offer narrower scope for reward and career progression.
We have also championed the voluntary, business-led drive by the noble Lord, Lord Davies, to get more women on boards. Women now account for around 23% of FTSE 100 directors, up from 12.5% in February 2011, and there are now no all-male boards in the FTSE 100. It is a huge step forward. Last night I attended the fantastic dinner for women on boards, hosted by the Secretary of State for Business, Innovation and Skills and sponsored by Lloyds Banking Group, encouraging this key group of women to drive forward further progress, which I believe is very important.
We are modernising the workplace to give women a fair chance to get to the top. Last June, the right to request flexible working was extended to all employees, and from April we will introduce a new system of shared parental leave. Further, almost 2 million families could benefit from our new tax childcare scheme from autumn 2015, which is worth up to £2,000 per child.
In January we published new guidance for employees on the gender pay gap. Research has shown that organisations perform better when they have a good balance of women across teams and in senior roles. Our guidance helps women to check if they are being paid fairly and encourages good practice of the kind the noble Baroness mentioned. Furthermore, new EU software to help UK employers analyse their pay data can now be downloaded for free. We are already encouraging greater transparency about pay. We have banned pay secrecy clauses, changed company reporting on boardroom diversity and introduced mandatory equal pay audits for companies that lose equal pay claims. We have also been working in partnership with business to tackle the root causes of the gender pay gap and promote culture change and greater transparency through the Think, Act, Report initiative, which the noble Baroness mentioned.
Because of Think, Act, Report we now we have a powerful business community of best practice with more than 275 leading companies—the figure is right—employing more than 2.5 million people, leading the way on gender equality. Of course, Think, Act, Report was never intended as a substitute for Section 78; it is so much broader and has achieved a lot. We said that we would keep Section 78 under review and that is exactly what we have done. We now want to build on the progress we have made. We need to take into account that one size will not fit all and that is why the Government feel strongly that we must consult on how Section 78 is taken forward. I welcome the amendment from the noble Baroness, Lady Thornton. I am proposing two amendments to it—Amendment 58ZZA to ensure it fits properly with the Equality Act provision, and Amendment 58ZZB to require consultation before implementation—which the noble Baroness has graciously indicated that she will accept.
We know that business is particularly concerned about being required to report more information, so we also want to ensure that the Government actively engage business during a proper consultation. This will ensure that we find the best way of implementing Section 78 in a business-friendly way, making use of information employers already have available and without being bureaucratic. In order to bring forward tailored, workable regulations, it will be essential for the Government to consult business properly, as well as others with interests and expertise in the area. We want to ensure that the requirements on business can be fulfilled and that the data published are of real use. I am therefore grateful to the noble Baroness for agreeing to these important adjustments to her amendment.
Lord Low of Dalston (CB)
My Lords, I was glad to put my name to the amendment in the name of the noble Baroness, Lady Thornton, and I am equally delighted to support the government amendment that essentially accepts the noble Baroness’s amendment but makes some minor modifications to the text. In view of the welcome degree of consensus that is breaking out, I will endeavour to speak quite briefly.
The Equal Pay Act was passed in 1970—all those years ago—but 45 years on there is still a significant gender pay gap. In 2014, women in full-time employment earned 9.4% less than men in full-time employment. The gap was wider for part-time work. Female part-time employees earned 37.9% less than male full-time employees. For all employees, the gender pay gap was 19.1%.
Lord Watson of Invergowrie (Lab)
I welcome the Government’s acceptance of the amendment in the name of my noble friend Lady Thornton and their decision to take it slightly further by changing “may” to “must”. That is an improvement and it is to be welcomed as well. I am not quite sure that I would go as far as my noble friend Lady King who was rather effusive—perhaps she was indulging in irony—in saying that the Conservatives and Liberal Democrats were now all over this like a rash. Having been involved with various aspects of this Bill through its passage, I suspect that the driving force in this is in fact the Minister herself and that some of her colleagues may not be entirely signed up to it. I suspect that the word “burdens”, which we have already heard today, will be one that will appear more than once this afternoon in terms of zero-hours contracts, fixed-term contracts, internships and so on—and yet the burdens will always be the burdens on industry and never the burdens on the individual workers who have to work those hours.
This particular amendment is about women. I hope that we can hear a bit more about the burdens that people have to suffer. Earning only 81p in the pound is a burden that no woman should have to suffer. If the amendment opens things up and exposes companies that for whatever reason are paying at different levels, that is a real step forward. I welcome the amendment—and the amendment to the amendment
Baroness Neville-Rolfe
My Lords, I thank the noble Baroness, the noble Lords, Lord Low and Lord Watson, and the noble Baroness, Lady King of Bow, for their contributions to the debate. I am pleased that there is widespread support for the approach. It builds on the Equality Act 2010 and the progress that I believe has been made since 2010. I also pay tribute to the noble Lord, Lord Stoneham, and thank him for what he said about culture, since culture and transparency are very important in promoting gender equality. I ask noble Lords to support these amendments.
Lord Young of Norwood Green (Lab)
My Lords, I intend to be brief. My noble friends Lady Hollis and Lady Drake have given a forensic examination, based on factual analysis, and I do not feel I need to go through it again. I want to address some of the comments made by the noble Lords, Lord Stoneham and Lord Deben, and the noble Baroness, Lady Harding.
On the UK labour market, the first thing we need to understand is that it is probably the most flexible labour market in Europe. Nobody could say that we are like France, Italy or Spain or that we have something that makes it almost impossible for employers to hire people flexibly. I will leave noble Lords with the following thought. On grounds of fairness, are we going to say that a zero-hours contract means zero rights? Just to remind us, under zero-hours contracts there is no sick pay, no holiday, no national insurance contributions and nothing towards a pension—that is a pretty demanding contract as it is, and it is hardly weighted against the employer.
Nobody on this side who has supported these amendments has suggested that we want to do away with zero-hours contracts in their entirety. We accept that, for some people, they are a valid and necessary means of employment, both for the employee and the employer. However, there ought to be some reasonable ground rules. If you are running a business, yes, there will be changes in circumstances; that is undoubtedly right. However, this amendment aims to lay down a principle which it says will be interpreted in regulation and which will not just be dealt with by the spectre of solitary civil servants, who apparently between them have never experienced an hour of work in industry at all. From my brief ministerial career, I know that that does not necessarily apply to all civil servants, so I do not accept the idea that they will work in a total vacuum—that is an unnecessary fear.
Are we really putting forward the basic argument that, if I am being contacted and told by the employer, “I want you to turn up for work”, and I turn up, honouring my side of it, the employer has no responsibility whatever? I listened carefully to the noble Baronesses, Lady Perry and Lady Harding, and there might be other circumstances, but that is a question of taking into account how we phrase the regulations, so we can take those into account. That is not an argument for saying that there should be no control over this situation at all.
The noble and learned Baroness, Lady Butler-Sloss, reinforced the point, which my noble friend Lady Hollis had made, that it is curious that the CBI supports this. That is hardly an organisation that would support something it thought totally inflexible. Surely this is about basic fairness, is it not? If we are enjoying the services of somebody who is working under those conditions, surely it is right that they should have some fairness applied in the way they are summoned to their employment.
Surely we are seeking to encourage reasonable standards of management. I will give another statistic from the Chartered Institute of Personnel and Development: only one in five British managers has any training at all. I point that out to the noble Baroness, Lady Harding, because it is as important as some of the other statistics she quoted. Of course, people will declare that they are satisfied—they need the money and are glad to get into work. However, when we are being served by those people, do we not feel that there should be certain basic rights? This is one of them.
We commend the Government for getting rid of the exclusivity provisions in such contracts, which was clearly unfair. However, because of the way this amendment has been made it ought to attract cross-party support. We are not taking a political stance here, but a stance on responsible and effective management—that is what it is all about—and on giving a reasonable right to the employee. It can be dealt with very effectively in regulations, and I hope that the House will overwhelmingly support it.
Baroness Neville-Rolfe
I thank the noble Lord, Lord Young, for his intervention. I am very grateful to the noble Baronesses, Lady Hollis and Lady Drake, for their amendment and for allowing us the opportunity to return to the important provisions on zero-hours contracts in the Bill, and specifically to the matter of compensation for late-notice shift cancellations.
We had a debate in Committee, but I see that the noble Baronesses’ amendment now seeks to apply their proposal much more widely across the workforce. I also listened to the noble and learned Baroness, Lady Butler-Sloss, and the noble Baroness, Lady Perry, both of whom brought the benefit of their own experience of this matter. I have some myself, as I have four children —although the noble Baronesses are right to say that that is not necessarily relevant to the debate. I thank the noble Lords, Lord Butler and Lord Cunningham, and the noble and learned Lord, Lord Lloyd. I was also pleased to hear my noble friend Lord Deben comment on the dilemma of replacing less good employment with no employment.
The noble Lord, Lord Stoneham, rightly reminded us of the need to be careful not to throw the baby out with the bathwater. We in this country have done a lot with our flexible labour market, which has helped us to create 2 million jobs in this Parliament. I was also glad to hear from my noble friend Lady Harding, who came at the matter as a practical business person and thought about customers and the detailed definitional issues that we always get into on these matters.
Perhaps I should remind those who were not in Committee of what we are already doing about zero-hours contracts. Our consultation identified exclusivity clauses as the biggest issue. We have acted, and as a result of Clause 151, no zero-hours worker will be forced to be exclusive to an employer that does not guarantee them any work. There is also new information. The Government have published today our response to the consultation on zero-hours contracts, Banning Exclusivity Clauses: Tackling Avoidance. We have also published draft regulations that illustrate how the Government intend to use this power in the Bill.
The draft regulations propose that those employed on a zero-hours contract will have protection against suffering detriment on the grounds of working for another employer, and will be able to make a complaint to an employment tribunal. If a complaint is upheld, they may receive compensation. I know from our Committee debates that this is something that noble Lords opposite were keen to see, and I hope it will be welcomed.
In addition, the draft regulations propose to widen the ban on exclusivity clauses to all contracts of employment or workers’ contracts where the individual is not guaranteed a certain level of income. I hope that this, too, will be welcomed by the noble Baronesses, and will improve the situation. The regulations will extend the protection and ban exclusivity terms for other vulnerable groups in the labour market, beyond zero-hours contracts alone. People will be able to work more hours and boost their income if they so wish. This is in line with the responses we received.
What is more, the Government are updating the guidance on zero-hours contracts, and we intend to publish this on GOV.UK before the end of the Parliament. This is in addition to any sectors producing their own codes of practice on the responsible use of these contracts, as some noble Lords suggested.
We consider that a business-led approach is the best way to ensure a lasting culture change in the treatment of zero-hours workers, which the whole House wants. I hope that that demonstrates that we are listening to the concerns raised in this House and are acting to protect vulnerable workers—because I take the point that it is the vulnerable workers whom we are concerned about.
Amendment 58ZZC seeks to provide compensation for short-notice shift cancellations—but it proposes that the rights should apply to all workers, not just zero-hours workers. So it is not, as the noble Baroness suggested, a modest amendment, and I am not sure that the CBI supports the proposal. In March 2014 it said that a simple system of compensation might work for some zero-hours contracts. That was before we introduced the changes in this Bill—and the CBI’s comment did not apply to all workers. More recently, it has, I think, come round to the idea of regulating zero-hours contracts, and has said that the Bill’s,
“ban on exclusivity clauses in zero hours contracts … is a proportionate response to tackling examples of poor practice, and strikes the right balance between flexibility for both employers and workers”.
All those in work in the UK will have an employment status, which determines the protections to which they are entitled. Most commonly, individuals are “employees”, “workers” or “self-employed”. As the “worker” category includes all “employees”, this means that this amendment would potentially extend to the vast majority of the labour market. It requires the Secretary of State to make regulations—the wording is “shall”—and requires employers to pay compensation to workers whose shifts are cancelled without notice.
Baroness Hollis of Heigham
My Lords, I am grateful to all my noble friends who took part in the debate—my noble friends Lady Drake, Lord Young and Lord Cunningham. Indeed, I am grateful for all the contributions from around the House. However, what has puzzled me a little about the contributions from around the House is the fact that most of the argument seems to have been about the need for, and virtues of, zero-hours contracts as such, and the need for a flexible labour market. I had hoped that we had been at pains to establish that of course customers, consumers, passengers and patients now live in a 24/7 economy. The issue is not about ZHCs; it is not even about codes of practice, because good employers such as Marks & Spencer do not abuse ZHCs, whereas Boots does. Pret a Manger does not abuse them, although McDonald’s does. Good employers can already decide how best to employ their staff. Whether a company does or does not have ZHCs is not the issue.
The issue is that there are some people with ZHCs, as the noble and learned Baroness, Lady Butler-Sloss, and the noble and learned Lord, Lord Lloyd of Berwick, rightly said, who are exploited and suffer because although they are summoned to work by text, often overnight, they turn up and are then sent home again without a penny. What is more, they may have spent £5 or £8 in travel costs to get there and back. They may have spent £15 or £20 in childcare to get there and back and they get not a penny of recompense for the expenditure they made to uphold their side of the ZHC contract.
All that I am asking for is fairness, as the noble and learned Lord, Lord Lloyd, said—fairness between the employer who can dispense with the services of somebody and the employee. He may need to do that—I can see the point—but it should not be the worker who exclusively and solely bears the cost of the cancellation. That is what is unfair; not ZHCs, not flexible labour contracts, but the fact that only one party, the most vulnerable, the poorest, the weakest, should bear the cost of a zero-hours contract when they turn up to work and the work is taken away from them, even though they are doing exactly what the employer requests.
The noble Lord, Lord Deben, was worried. I thought that the speech by the noble Lord, Lord Butler, was admirable in putting the simple point that the amendment would require the Secretary of State to make regulations, but keeps the content entirely open. However, we expect them to reflect the spirit of the discussion in this House tonight that zero-hours contract workers—the people we are concerned about—should be able to be protected in this way.
In Committee, the Minister said that the Secretary of State already had powers to do that. This was followed up by a letter saying that that was not the case. The order-making power does not extend to other issues around ZHCs such as compensation for late-notice cancellations. I repeat that the Secretary of State has no power presently to regulate this anomaly at best—this exploitation, bluntly, at worst—that we all agree is unfair. He has no such power. The amendment would give him that power. After consultation with the sector—it may take months, I fully accept that—he can then introduce appropriate requirements for codes of practice or whatever may be proper to defend the people of whom the noble and learned Baroness, Lady Butler-Sloss, so eloquently reminded us: the lone parent who may be £20 or £30 out of pocket because at five minutes’ notice her shift is cancelled. At the moment, the Secretary of State does not have the power to do that.
This is not about ZHCs or the flexible labour market, I am asking your Lordships to do what this House is always at its best in doing: say to the Secretary of State, “We are willing to give you the power, we expect you to handle it sensibly, in consultation with industry, but it is not fair, as the noble and learned Lord, Lord Lloyd, said, that the most vulnerable should pay the cost of the employer’s requirements”.
Baroness Neville-Rolfe
The noble Baroness’s amendment goes beyond zero-hours contracts. She is emphasising the zero-hours aspects, but this is compensation to all workers, as I sought to explain—and I sought to explain the perversities.
Baroness Hollis of Heigham
If the noble Baroness is worried that the technical quality of the amendment is insufficient, it can be overturned in the other place and replaced with an amendment that embodies what she and the Secretary of State would wish to see. There is no problem about that. When I was a Minister, I accepted amendments all the time that were technically defective but which reflected the spirit and will of this House, because it was the right thing to do. If they needed tidying up, that could be done perfectly easily in the other House. That is not a reason not to accept the amendment today.
We are talking about ZHCs; all of us have been talking about ZHCs. As the noble and learned Lord, Lord Lloyd, said, this is fair and the right thing to do. Workers who keep their side of the contract should not then find themselves out of pocket, because the employer does not. The CBI agrees. I hope that your Lordships will also agree tonight. I beg leave to test the opinion of the House.
Lord Hunt of Kings Heath (Lab)
My Lords, this is a very important group of amendments. The government amendment, which the Opposition are supporting, clearly comes on the back of the Francis report on Mid Staffordshire. I also point noble Lords to the very recent report by Dr Bill Kirkup and an expert panel of members, who looked into maternal care at the University Hospitals of Morecambe Bay NHS Foundation Trust.
That report, as the Statement which we had last week in this House said,
“found 20 instances of significant or major failings of care at Furness General Hospital, associated with three maternal deaths and the deaths of 16 babies at or shortly after birth. It concludes that different clinical care would have been expected to prevent the death of one mother and 11 babies”.
It described,
“major failures at almost every level … mistakes by midwives and doctors, a failure to investigate and learn from those mistakes, and repeated failures to be honest with patients and families, including the possible destruction of medical notes. The report says that the dysfunctional nature of the maternity unit should have become obvious in early 2009, but regulated bodies”,
including the north-west strategic health authority, primary care trusts, the CQC, Monitor and the PHSO—that is, the ombudsman,
“failed to work together and missed numerous opportunities to address the issue”.—[Official Report, 3/3/15; cols. 158-59.].
For the purpose of our debate, the report also showed that the drive for a transparent and open culture in the NHS has some way to go. Notes were destroyed and mistakes were covered up. Dr Kirkup’s assessment is that it was,
“possibly because of a defensive culture where the individuals involved thought they would lose their jobs if they were discovered to have been responsible for a death”.—[Official Report, 3/3/15; col. 160.].
It seems from Francis, the Morecambe Bay report and our general experience of the NHS that there is a pressing need for a transparent and open culture, in which the protection of whistleblowers is an important element.
Ministers in this Government and the previous Government have from time to time issued various edicts about the importance of the protection of whistleblowers. There has been guidance on this, but it is clear that a whole swathe of staff in the NHS still do not feel confident about raising concerns on patient care. That is why the Opposition very much support government Amendment 58A but I, like other noble Lords, do not think that we can stop at the NHS. That is why I also support the amendments tabled by my noble friend Lord Wills and the noble Lords, Lord Low and Lord Phillips.
As my noble friend Lord Wills said, there are “significant gaps” and loopholes,
“in the current protections for those making disclosures in the public interest”.—[Official Report, 26/1/15; col. GC1.]
While we have at least had a lot of debates about failures in the NHS, one has only to think of the issues following the Hillsborough football disaster, as my noble friend said in Committee, more recently in Rotherham with child abuse and then recently in Oxfordshire, again with child abuse. I am not sure whether this has been corroborated by an independent inquiry, but the point has certainly been put that a junior member of staff in Oxford City Council was subject to discouragement for raising concerns because of approaches made by Oxfordshire County Council, which was responsible for childcare, to senior officials in Oxford City Council to try to stop this person raising what seemed to be eminently sensible concerns about the way that these cases were being dealt with—or not being dealt with—in Oxfordshire.
The noble Lord, Lord Phillips, mentioned the banking world and my noble friend Lord Wills mentioned the construction industry, which is a great example. If a construction worker raises health and safety concerns, there are very good companies in the construction world where they are taken seriously. Overall, my noble friend knows that there has been considerable improvement but there are companies where, if employees raise those concerns, they are blacklisted and cannot get work in the industry. Again, where is the protection for those people?
What about education, a notorious sector where if teachers raise concerns they can look for very little protection? In education, the principal or head often has a dominant role in the governing body. In schools and colleges, there are often no procedures whatever for whistleblowing. At least in the health service there are procedures and very strong corporate governance, with a tradition of company secretaries who should be able to make sure that the procedures work. In the education sector, there are no such guarantees at all. It seems to me that my noble friend and his colleagues are absolutely persuasive. We need protections which go far beyond the National Health Service. I very much hope that the Minister will listen to these arguments and agree either to support these amendments or come back with amendments on Third Reading which would meet the point raised by my noble friend.
Baroness Neville-Rolfe
My Lords, I thank the noble Lords, Lord Wills and Lord Low, and my noble friend Lord Phillips for these amendments. I pay tribute to the tireless campaigning of the noble Lord, Lord Wills, on whistleblowing. I am not sure that we would be where we are, if not for him. I also thank others who have been involved. The noble Lords, Lord Young and Lord Stoneham, and the noble Baroness, Lady Mobarik, were involved in Committee. It is good and right to hear also from the noble Lord, Lord Hunt, given the health aspect of this problem.
I make it absolutely clear that the Government share the widespread support in this House for whistleblowers and will continue to make strides in strengthening the whistleblowing framework, obviously not least because of the scandals at Mid Staffordshire and Morecambe Bay, which have been so eloquently referred to. That is why we are taking action through this Bill and elsewhere. I was glad that my noble friend Lord Phillips and the noble Lord, Lord Hunt, acknowledged that. First, we are protecting whistleblowers from being discriminated against when applying to work in the NHS. The noble Lord described some graphic examples. Secondly, we are taking action to improve transparency in the way that regulators handle whistleblowing concerns.
On the first point, the Government have tabled an amendment in response to the recent Francis review. This recommended that the Government,
“review the protection afforded to those who make protected disclosures, with a view to including discrimination in recruitment by employers”.
Based on Sir Robert’s findings, we are convinced that blacklisting applicants for NHS jobs because they are whistleblowers causes a very serious injustice. They are effectively excluded from the ability to work again in their chosen field. When NHS staff raise concerns, they can save lives and prevent harm. That is why we are taking the opportunity, very much at the last stage of the Bill, to protect whistleblowers seeking employment in the NHS.
Amendment 58ZA, tabled by the noble Lord, Lord Wills, seeks to protect all job applicants who have blown the whistle. I have listened to his arguments around other sectors; I think that this evening people have mentioned policing, social care, construction, banking and education. I sympathise. No job applicant in whatever sector should be disadvantaged by being a whistleblower but—I have to use the word of the noble Lord, Lord Wills—when we debated this in Committee, I expressed my concern about the lack of evidence that there was a widespread problem right across the board. We do not have the level of evidence for other sectors on the nature of the gap or the scale of the problem.
Lord Hunt of Kings Heath
Is the point not that for all the NHS’s failings, it probably has a more open culture than many other sectors? That is why we know more about the problems of whistleblowing there. In education, it is much more difficult to have central government intervention in cases where staff have clearly been intimidated. In a sense, some of these other sectors need much more attention. The noble Lord, Lord Phillips, talked about the banking industry. Does anyone have any confidence at all that if someone working in the City raised concerns, even after the failures, they would be taken seriously? I rather doubt it.
Baroness Neville-Rolfe
We have very good evidence from the Francis review. We do not have evidence for all other sectors and, of course, the amendment would apply to the private sector and the coverage would be very wide-ranging. Several noble Lords asked why it is a two-tier system and the noble Lord, Lord Hunt, asked why we are not doing it universally. Sir Robert’s findings were health-specific. He reported that he had seen evidence of individuals suffering serious detriment in seeking re-employment in the NHS after making a protected disclosure. That is what we are talking about. The health sector has one of the highest instances of whistleblowing reporting, perhaps for the reasons that the noble Lord, Lord Hunt, suggested, and, consequently, has the greatest potential for discrimination against whistleblowers, who therefore cannot get another job. The NHS is one of the largest employers in the world, I am glad to say, and should operate to the very highest standards of integrity in its recruitment practice.
Lord Low of Dalston
I thank the Minister for giving way. She makes the case that we have particular evidence in relation to the health service and so she wants to act on the health service. With regard to all the other sectors that we have asked the Government to take into consideration as well, would it not be better to put a system in place to stop the scandal before it happens rather than wait and close the stable door after the horse has bolted?
Baroness Neville-Rolfe
I thank the noble Lord, Lord Low, for his intervention. We have to legislate in an informed and evidence-based way. We have brought forward the provisions on the NHS and it is very good that noble Lords opposite support that at this late stage. We are not in the same situation in relation to other sectors. There are various arrangements and we are making general improvements on whistleblowing.
Lord Stevenson of Balmacara
I am sorry to interrupt. I just want the Minister to clarify something. She said that our support for her amendment was at a late stage. I point out that that is not the case. We saw the amendment at noon one day and I signed up to it as soon as it appeared. It was certainly not at a late stage. We are very supportive of what she is doing. Our problem is that she is not doing it in nearly enough other cases. Her case that more evidence is required really does not stack up.
Baroness Neville-Rolfe
I am sorry if I caused confusion. What I was saying is that this is a relatively late stage in this Bill and that what we have done is taken steps to bring forward some of the actions that follow from the Francis review. Noble Lords opposite have been extremely helpful about supporting that and supporting it instantly. I am very glad to have been able to end that confusion.
Lord Wills
I am very sorry; the Minister is gracious in giving way yet again. Before she leaves this amendment, will she clarify the points that she is making about process? Just to be clear—she can indicate with a nod, if she wishes, rather than getting to her feet yet again—does she accept that whistleblowing can be essential in protecting the public interest and the public in other sectors apart from the NHS, such as the financial sector, the police, and adult and child social care? That is my first question to the Minister.
Baroness Neville-Rolfe
I thank the noble Lord, Lord Wills. Of course whistleblowing can play a vital part in all areas. I said that right at the beginning. As far as this Bill is concerned, we are taking specific steps in relation to the NHS. Perhaps if I could make a little bit more progress, I could explain some of the other things that we are also doing.
Lord Wills
I wonder whether I could just push the Minister a little bit further on this process. She says that the Government do not have the evidence to take the measures for other sectors that they are currently taking in relation to the NHS. She said that the Francis report has produced the evidence that the Government feel they need to proceed. I accept that. It is a perfectly reasonable approach. However, if she accepts that whistleblowing is so important in all these other vital sectors and that there is a loophole in protections that the Government are seeking to plug—clearly they accept that there are loopholes because they are seeking to plug them in relation to the NHS—why will the Minister not commit now to launching an inquiry to see whether such evidence exists? The Government did it with Mid Staffs; they have done it with other scandals; they know that there is a problem here; they know that it is important to tackle this problem. Why do the Government not commit now to collecting the evidence to see how best they can move to plug these loopholes?
Baroness Neville-Rolfe
My Lords, I am not sure that we are going to agree this evening on extending to other areas the provisions that we are very happy to include for the NHS. I have made clear that we need an evidence base and that we are doing things in other areas. The things that we are doing in other areas, to which I hope to move on, will also help to show what is happening on the ground. The debates that we have had in the House, which the noble Lord, Lord Wills, has encouraged us to have, will also change the culture in relation to whistleblowers. The very fact of the disastrous circumstances in the NHS has shown how important whistleblowers are, which is why we are making the changes that we are in relation to recruitment in the NHS.
If I may make progress, I will turn to the noble Lord’s Amendment 59, which seeks to introduce a rolling statutory review of the whistleblowing legislation. I can reassure the noble Lord, Lord Wills, that it was only last June that the Government reported the findings from their call for evidence that reviewed that legislation. The Government have also carried out an extensive employment law review during this Parliament. Looking to future review processes, we see that post-legislative scrutiny is applied to all changes to legislation five years after the measures have come into force. We have an impressive rolling programme. The changes that we introduced to the whistleblowing framework in the Enterprise and Regulatory Reform Act 2013, and the changes in this Bill, will be included in the rolling process. Considering the steps that we have taken to review employment legislation, and specifically whistleblowing legislation, I do not believe that it is necessary to introduce another review next year.
I turn now to Amendments 59A to 59F, which seek to create a national whistleblowing review officer. The Government fully understand the intention behind the proposed new clauses, which is to ensure that concerns raised by whistleblowers are acted upon. We know from research carried out by the University of Greenwich and Public Concern at Work that 75% of whistleblowers believe not enough is done about the concerns that they report. We want employers or the relevant authority to take action. That is why we are introducing the important measures in this Bill to require prescribed persons to report on how they handle whistleblowing concerns. That will increase transparency and reveal any circumstances where whistleblowing concerns are not addressed. The Government will want to allow time for this measure to take effect before they consider yet further measures. Introducing a body that has oversight of all investigatory action in response to whistleblowing concerns would be one way of going further, depending on what the need for further action was. But of course there could be other options for the Government to consider, based, as I have said, on evidence. Before introducing legislation, the Government will want to carry out a proper assessment of all available options to ensure that they are not introducing a body that was duplicating the existing functions of the regulators. This is a complex area.
Evaluation work will begin by the Department of Health publishing a consultation, which will explore the case for creating an independent whistleblowing guardian for the NHS. The Government will be able to use the evidence gathered from that consultation to look at the situation in other sectors. I cannot emphasise enough the importance of having a proper evidence base and the fact that we have been able to fast-track the Francis recommendations because of the very powerful work that he has done.
The Government are committed to addressing the barriers that whistleblowers face. In addition to the measures in this Bill, we have made significant progress. Perhaps I could mention some other measures that we have taken forward. We are updating a set of comprehensive guidance for whistleblowers and employers as well as introducing a non-statutory code of practice for employers. The Government intend to publish this shortly. We have carried out work to update the list of prescribed persons. This is a list of more than 60 individuals and bodies, which includes all MPs, that a whistleblower can approach to raise their concerns. The Government have recently introduced separate legislation, which comes into force in April this year, to extend the scope of the whistleblowing framework to student nurses and student midwives.
The whistleblowing framework is improving and robust processes are in place for future work and the continuous review of the legislation that we have introduced. I hope that the noble Lord will agree that much further exploratory work would be required before proper consideration could be given to his proposal for a national whistleblowing review officer and for extending legislation to cover all job applicants, whether in the public or the private sector.
We have made a major change in relation to the NHS. Perhaps that has eclipsed the other important changes in this Bill and other progress that we have made on whistleblowing. I commend the Government’s amendment and invite the noble Lord to withdraw his amendment.
Lord Phillips of Sudbury
My noble friend the Minister said a number of times that there is insufficient evidence for extending what the Government are doing in this Bill vis-à-vis health to other sectors. Let us think again of the financial centre of this country. The collapse that we had in 2008 was perhaps the greatest financial collapse in our entire island history. It involved extensive and universally accepted huge breaches in the criminal law: the LIBOR fixing, the forex fixing, PFI—the list goes on and on. How can my noble friend say that there is insufficient evidence to warrant extending to this sector, if none other, some of the requirements that we are now extending to the health service?
Baroness Neville-Rolfe
My Lords, we are bringing in the new process provided for in the Bill which will allow greater review and engagement in those other sectors.
Lord Wills
My Lords, this has been a short but worthwhile debate on some important issues about improving protections for the public through whistleblowing. I am grateful to all noble Lords who have taken part. I am particularly grateful to the noble Lords, Lord Low and Lord Phillips, for adding their names to the amendments and for their compelling arguments in support of them. I also thank my noble friend Lord Hunt for his powerful support. I am grateful also to the Minister, who throughout our discussions, both in Committee and again today, has engaged thoroughly and thoughtfully with all these complex issues and has been helpful and constructive.
In view of everything that the Minister has done so far, it is all the more disappointing that she has so summarily dismissed all the amendments. I accept the case that she made about review; I accept that there is a review process in place. Personally, I would like to see rather more frequent review, which may be a matter we can return to—although I reassure her that it will not be at Third Reading. I also accept the arguments that she made about the national review officer. This is a big and complex issue. There is a case to be made for seeing how the Francis recommendation beds down to learn the lessons from that, but I hope that it will remain on the Government’s agenda because it would be well worth pursuing.
However, I can see no good reason for the Government not to accept Amendment 58ZA. There is no good argument for confining protection for job applicants to those working in the NHS. The Minister made great play of the need to acquire more evidence. There are two problems with that approach. The first was identified by my noble friend Lord Hunt, which is that, by definition, it is extremely hard to find evidence of the harm that is done in advance of a scandal happening. When people working in professions such as the NHS, the financial sector and the police look at the examples, perhaps the rare examples, of their colleagues who have blown the whistle, they see the acute detriment that they have suffered as a result. Who is going to come forward and suffer in that way—which is actually the evidence that the Minister appears to be asking for? We know that there is a problem; we should be tackling it.
If we persist with the desire for more evidence and if that is what the Minister needs to make progress in tackling the loopholes that the Government have conceded exist, why has she just rejected my plea for her to commit to seeking out such evidence? The only reason that we are discussing the government amendment today is that a scandal happened with Mid Staffordshire, and Sir Robert Francis conducted his exhaustive and excellent inquiry and came up with the evidence. Do we have to wait for another such scandal in the financial sector finally to get to the bottom of all the skulduggery that lay behind the crash of 2008 and subsequently, or another scandal in the police such as Hillsborough, before the Minister acquires the evidence that we need to plug the loopholes?
I want to encourage the Government to think again. They have already shown themselves to be extremely flexible between Committee and Report. To encourage them to be similarly flexible between today and Third Reading, and in the hope that they will move forward in some of the ways that I have suggested today, I would like to test the opinion of the House on Amendment 58ZA. If I am successful, may I assume that the Government will accept my Amendment 59A as consequential, as it so closely mirrors the Government’s Amendment 58A on the creation of a national review officer?
“Protection for applicants for employment etc in the health service
(1) The Employment Rights Act 1996 is amended as follows.
(2) After section 49A insert—
“Part 5Aprotection for applicants for employment etc in the health service49B Regulations prohibiting discrimination because of protected disclosure
(1) The Secretary of State may make regulations prohibiting an NHS employer from discriminating against an applicant because it appears to the NHS employer that the applicant has made a protected disclosure.
(2) An “applicant”, in relation to an NHS employer, means an individual who applies to the NHS employer for—
(a) a contract of employment,(b) a contract to do work personally, or(c) appointment to an office or post.(3) For the purposes of subsection (1), an NHS employer discriminates against an applicant if the NHS employer refuses the applicant’s application or in some other way treats the applicant less favourably than it treats or would treat other applicants in relation to the same contract, office or post.
(4) Regulations under this section may, in particular—
(a) make provision as to circumstances in which discrimination by a worker or agent of an NHS employer is to be treated, for the purposes of the regulations, as discrimination by the NHS employer;(b) confer jurisdiction (including exclusive jurisdiction) on employment tribunals or the Employment Appeal Tribunal;(c) make provision for or about the grant or enforcement of specified remedies by a court or tribunal;(d) make provision for the making of awards of compensation calculated in accordance with the regulations;(e) make different provision for different cases or circumstances;(f) make incidental or consequential provision, including incidental or consequential provision amending— (i) an Act of Parliament (including this Act),(ii) an Act of the Scottish Parliament,(iii) a Measure or Act of the National Assembly for Wales, or(iv) an instrument made under an Act or Measure within any of sub-paragraphs (i) to (iii).(5) Subsection (4)(f) does not affect the application of section 236(5) to the power conferred by this section.
(6) “NHS employer” means an NHS public body prescribed by regulations under this section.
(7) “NHS public body” means—
(a) the National Health Service Commissioning Board;(b) a clinical commissioning group;(c) a Special Health Authority;(d) an NHS trust;(e) an NHS foundation trust;(f) the Care Quality Commission;(g) Health Education England;(h) the Health Research Authority;(i) the Health and Social Care Information Centre;(j) the National Institute for Health and Care Excellence;(k) Monitor;(l) a Local Health Board established under section 11 of the National Health Service (Wales) Act 2006;(m) the Common Services Agency for the Scottish Health Service;(n) Healthcare Improvement Scotland;(o) a Health Board constituted under section 2 of the National Health Service (Scotland) Act 1978;(p) a Special Health Board constituted under that section.(8) The Secretary of State must consult the Welsh Ministers before making regulations prescribing any of the following NHS public bodies for the purposes of the definition of “NHS employer”—
(a) a Special Health Authority established under section 22 of the National Health Service (Wales) Act 2006; (b) an NHS trust established under section 18 of that Act;(c) a Local Health Board established under section 11 of that Act.(9) The Secretary of State must consult the Scottish Ministers before making regulations prescribing an NHS public body within any of paragraphs (m) to (p) of subsection (7) for the purposes of the definition of “NHS employer”.
(10) For the purposes of subsection (4)(a)—
(a) “worker” has the extended meaning given by section 43K, and(b) a person is a worker of an NHS employer if the NHS employer is an employer in relation to the person within the extended meaning given by that section.”(3) In section 230(6) (interpretation of references to employees, workers etc) for “and 47B(3)” substitute “, 47B(3) and 49B(10)”.
(4) In section 236(3) (orders and regulations subject to affirmative procedure) after “47C,” insert “49B,”.”
“(2) “Financial award”—
(a) means a sum of money (or, if more than one, the sums of money) ordered by an employment tribunal on a claim involving an employer and a worker, or on a relevant appeal, to be paid by the employer to the worker, and(b) includes—(i) any sum (a “costs sum”) required to be paid in accordance with an order in respect of costs or expenses which relate to proceedings on, or preparation time relating to, the claim or a relevant appeal, and(ii) in a case to which section 16 applies, a sum ordered to be paid to the Secretary of State under that section.(2A) Subsection (2)(b)(i) applies irrespective of when the order was made or the amount of the costs sum was determined.”
Baroness Neville-Rolfe
My Lords, our penalty measure provides incentives for full and prompt payment of employment tribunal awards and creates sanctions for non-payment. This is supported by our non-legislative work to improve guidance to help individuals understand how to enforce their rights.
In Committee I agreed to consider an amendment to include costs in the relevant amount on which the financial penalty is to be calculated. We have been persuaded by the principle that the penalty should incentivise workers receiving all that they are owed by their employer, and that where a tribunal has decided that costs are to be paid, an employee is entitled to receive them. Our amendments do exactly that.
The amendments also allow the Government to make changes by regulation if, in practice, waiting for costs to be finalised before financial penalties can be issued causes too much delay. These amendments also deal with some other minor and technical issues. For example, they make it clear that penalties which are payable to the Secretary of State are not included, and clarify technical points such as when an award is considered paid in full.
I hope that noble Lords will be reassured that the Government have listened to the concerns raised in Committee and that we are creating the right environment for a worker to be able to receive their full employment tribunal award promptly. I thank noble Lords for the debates we have had on this subject, and I beg to move.
Lord Young of Norwood Green
My Lords, I thank the Minister for her contribution. If I may paraphrase, “Never look a gift horse or a gift concession in the mouth”. However, in this case I will make a slight exception. We had a useful meeting with the noble Baroness—who has disappeared out of sight now, but not, I hope, out of hearing—and her civil servants. I was asked by the noble Lord, Lord Low, to make his apologies. As the noble Baroness knows, he has been a frequent participant in this debate, and he regrets that he cannot be here tonight, so I said that I would apologise on his behalf.
In the meeting that we had with the Minister I raised the disparity between two cases. If an award is made for a failure to pay the national minimum wage and the employer does not respond after having been contacted by HMRC, and does not pay the outstanding national minimum wage, an enforcement officer takes action against the employer. In the case of somebody who has struggled, probably for a significant period of time, gone through enforced mediation, and who has been successful at an employment tribunal, if the employer still fails to pay, it is true that they now incur penalties—and the Minister has told us about the improvements made in that area. However, we suggested that the successful claimant ought to have first recourse to those payments—but the Minister rejected that, saying that for a variety of reasons it could not be done.
I then suggested in the discussions we had that if that were the case, why at that point in time—which could be anything between a year and two years —should the cost of enforcement fall on the claimant, who will have been through mediation and an employment tribunal, been successful, and won an award? I suggested that the Government should examine the possibility of enforcement, as they are doing with the national minimum wage. That was what I hoped the Minister would take away.
That has not been the case. I am not expecting a detailed response this evening, but I make a plea that she might take that away, and between now and Third Reading perhaps we can meet to see whether any further progress can be made. However, with those few comments, we are happy to support the amendments.
Lord Young of Norwood Green
My Lords, we have again had a long debate this afternoon about the flexibility of zero-hours contracts and what constitutes fairness in such contracts. The last Division was on an amendment which looked at the question of cancellation; unfortunately, we were not successful on that. Again, in this area there is an unfairness to zero-hours contracts. The House will note that we have not specified the period; we just wished to draw attention to a serious problem.
A number of contributions this evening talked about the need for flexibility in those contracts. As my noble friend Lady Hollis—who I see is in her seat—made clear, we are not opposing the principle of zero-hours contracts, but trying to lay the foundation for what we believe to be fairness in the arrangements. In a situation where regular hours are being worked for a continuous period or even a series of continuous periods of employment, surely that does not constitute the kind of flexible zero-hours contract that workers ought to expect. In those circumstances, we believe that the employer should be bound to offer the employee a fixed-hours contract.
If we look at the statistics behind the number of workers employed on contracts that last for a year or even two years, we find that they are not the kind of thing that we envisaged, or what was described today by noble Lords who talked of the need for a very flexible contract. That is, we believe, the justification for injecting fairness into a contract that in previous circumstances would probably have been a standard contract of employment. I look forward to the Minister’s contribution, and to hearing about the Government’s attitude to the amendment. I beg to move.
Baroness Neville-Rolfe
My Lords, I am grateful to the noble Lord, Lord Young, for tabling the amendment and giving us the opportunity to return to the matter of zero-hours contracts. I know that he genuinely wants the new regime to work, and I am grateful for that.
The amendment relates to a right to request fixed hours. However, it goes beyond zero-hours contracts and would introduce a right for all workers to demand a fixed-hours contract. This means that it would extend the right to the vast majority of the labour market. I have some sympathy with the noble Lord’s intention, but I am afraid there is a clear risk of negative consequences for the individuals affected, with some unscrupulous employers finding relatively simple ways to circumvent the legislation. For example, some employers could be incentivised simply to let people go before the qualifying period. That would impact negatively on the very people the amendment seeks to help.
None the less, I hope that I can reassure the noble Lord that the spirit of his amendment has already been addressed. The amended flexible working regulations, brought in on 30 June last year, give all “employees” the right to make a request to change their pattern of working after 26 weeks’ continuous service. The amendment would go further, by extending this right to all workers, but it is possible that individuals on zero-hours contracts who can prove a requisite qualifying period of 26 weeks may well be considered to be “employees”, and therefore be entitled to this right.
The Government’s approach has been proportionate in ensuring that employees have the right to request a change to their working pattern, while ensuring that businesses retain the flexibility they need to help drive economic growth. This flexibility will sometimes include a legitimate need to hire someone on a casual contract.
By extending the provision to all “workers”, the amendment could end up capturing many contractors and freelancers who may not want or need this right. What is more, many businesses rely on these individuals and other casual labour to provide specific tasks, and do not expect to hire them on a permanent contract at the end of their contract. A right to fixed hours after a certain period would obviously restrict this ability. I believe that the amendment could open a loophole, and might encourage employers simply to let individuals go before the end of the qualifying period. That is clearly not the outcome that any of us wants. I hope that on that basis, the noble Lord will feel able to withdraw his amendment.
Lord Young of Norwood Green
My Lords, I listened carefully to the Minister. If the wording of the amendment is not perfect, that does not stop her accepting the principle contained therein: and proposed new subsection (4A) does end with the words,
“to be determined by the Secretary of State”.
Yes, there will be a need for regulations, and I accept the noble Baroness’s point about freelancers and so on; there will be some exclusions. However, I return to the basic principle of fairness. We are talking about people who are not necessarily in a traditional freelance role but who, in a significant number of cases, are employed on a zero-hours contract for a year or even two years. We therefore feel that this is an important enough issue to test the opinion of the House.
Lord Storey (LD)
My Lords, that is the important issue. Let us be quite honest about this: a number of MPs, for example, have unpaid interns with parents who can afford to bankroll them. But if a young person is living on a council estate in Newcastle or Liverpool, how on earth would they be able to come to Westminster and have that experience? If we talk about social mobility, opportunities for all, the raison d’être of internships should be about providing those opportunities for every single person. It does not happen, which is very sad indeed.
I am pleased to say that some internships are paid and one applauds the businesses and individuals who pay interns at the minimum or living wage. Many internships are unpaid and there are businesses—advertising, for example—where the whole ethos is to take on unpaid interns who fight their way to the top. That is true of other businesses as well. It is interesting to look at America, where legal action is being taken against those companies that do not pay internships. In many cases, those businesses are putting their hands up and saying, “Right, we are going to pay our interns”. The same should happen in this country. We have work experience, which is about helping not the employer but the person gaining that short work experience. We have volunteering which, as the name says on the tin, is about volunteering because you want to do something good for a particular cause. Maybe for the first few weeks, an internship should be at your expense, but if it is any longer, you should be paid at a living wage.
I know the Government are sympathetic to this. I think right across this House we are sympathetic about it. There are issues to do with taxation and salaries that we need to understand. I realise it is very late in the day and the Minister cannot give any commitments. I guess nothing can change now, unless we push this to a vote, and I perhaps hope we do not. However, perhaps the Minister can meet us to go over in our own minds about how we might take this forward. I have talked to Ministers and I know that there is a degree of wanting to support this move.
Baroness Neville-Rolfe
My Lords, I am grateful to the noble Lord, Lord Mitchell, for giving us the opportunity to come back to the important subject of interns, to my noble friend Lady O’Cathain for her helpful and insightful comments, and to my noble friend Lord Storey for reminding us that this is a complex subject. I will begin by answering his first question. Obviously, I would be entirely happy to meet him to talk through this issue. I do not think it is possible—as I will come to explain—to do anything in this Bill, but that does not mean that we should not be exchanging comments, knowledge and evidence on this very important area, which I am also passionate about.
I think we all agreed in Committee that we wanted to encourage internships and that they should be fair, open and transparent in order to encourage candidates from a wide variety of backgrounds. The flexibility of our labour market is a great source of pride, as we discussed earlier. Of the growth of 2 million jobs in this Parliament, nine out of 10 were employees and nearly eight out of 10 were full-time jobs, so there are a lot of opportunities for young people, the unskilled and the long-term unemployed. Youth unemployment fell in the past year by 188,000, so that is good news.
Obviously in any part of the labour market, not just internships, we have to take action where there is any exploitation of individual workers. The use of internships is relatively new in the UK labour market. There is a lot more practice elsewhere, especially in the United States, and there is no definition of internship in our legislation. Individuals undertaking an internship will be workers, employees, or volunteers, depending on the reality of their employment relationship, and not their job title or what an employer decides should be set out in a contract.
Where the intern is an employee or a worker, they are entitled to at least the national minimum wage from day one and all other rights attached to their employment status. The Government are very clear that employing unpaid interns as workers to avoid paying the national minimum wage is illegal. Through tougher enforcement measures, such as increasing the maximum penalty fourfold, and naming and shaming employers, we have shown that we will crack down on employers who break that law. The Bill will also ensure that the maximum penalty is calculated on a per-worker, rather than per-notice, basis, as we discussed in Committee. We have also increased HMRC’s enforcement budget from £8 million to £9.2 million and we will increase the enforcement budget by a further £3 million in 2015-16.
Baroness Morgan of Huyton (Lab)
While I recognise that it cannot be done now in the Bill, it would be helpful to investigate the difference between work experience and internships. All of us are absolutely committed to work experience; the noble Baroness, Lady O’Cathain, and I have discussed this on several committees recently. Work experience cannot go on for ever; it cannot go on for week after week or month after month. There is a real difference. We need to encourage work experience, but that is, in essence, very different from the sorts of internships one comes across. One talks to people who are on their third unpaid internship and are clearly working. They can reach the age of 25 or 26 before they get paid employment. That is in particular sectors of the economy. Collectively, around the House, I think we are anxious to make sure, in encouraging social mobility, that we differentiate properly between work experience and internships.
Baroness Neville-Rolfe
I thank the noble Baroness for her intervention. She is absolutely right: we need to think about work experience and internships. I will come on to mention the work we are doing. We should certainly look at both aspects.
Before I finish on enforcement—this is an important point and I was asked about it in Committee—in this financial year alone HMRC has identified more than £41,000-worth of arrears for 21 interns who were underpaid the national minimum wage, so enforcement is taking place in this area.
One of the issues that we believe may make some interns uncertain is determining their employment status, which is obviously an essential precursor to understanding what their rights are and whether they are entitled to the national minimum wage. Determining an individual’s employment status can be difficult, as the noble Baroness showed so clearly. There is no one single test to determine whether a contract of employment exists and therefore whether an individual is an employee. We understand that, at times, this is very confusing. It affects various employers, but it also affects interns. Therefore, my right honourable friend in the other place the Secretary of State announced a review in October of employment status to consider these issues. The review will conclude soon.
I understand the concerns raised about pay and social mobility. Some young people probably do not know about opportunities or have access to internships that already exist. That is why the Government fund the Graduate Talent Pool to ensure that all young people have access to internships. That service is on GOV.UK. It is free to employers and graduates, and provides information on all aspects of internships. I am sure that we can do more, but I think it is good that we have done that. We want to encourage social mobility in particular and the Government’s Social Mobility Business Compact, which was launched in 2011, gets employers to commit to fair and open work experience and paid internship opportunities. I know from personal experience that many employers provide such internships and not just for the privileged few. We need to encourage that and keep it going.
My noble friend Lady O’Cathain mentioned career advice. We have recently committed new resources to career advice. That is an interesting addition to the debate.
I turn to the amendment. Internships are not formally defined and therefore the Government do not collect reliable information on a consistent basis that would allow the robust provision of data sought in the amendment. The Government have undertaken research on wider issues that may relate to internships, such as social mobility. We need to be properly informed of the issues around internships to ensure that policy is set appropriately to maximise flexibility and prevent exploitation.
As part of our employment status review, the Government are gathering information through consultation with stakeholders to understand both the current position of groups in the labour market and whether future changes are appropriate. This includes internships and will no doubt provide useful information and data for future discussions.
In summary, I understand and share some of the concerns raised in this debate. We take exploitation of interns very seriously and we already try to act through national minimum wage enforcement to prevent exploitation. Other employment measures in the Bill, such as changing the penalty regime, will of course be helpful. There must be more that the Government can do—that is why we have undertaken a review of employment status—but I hope that the noble Lord will support what the Government are doing and will be content to withdraw his amendment.
“(1) For the purposes of section 152(1) circumstances are qualifying circumstances if—
(a) an exit payee becomes—(i) an employee or a contractor of a prescribed public sector authority, or(ii) a holder of a prescribed public sector office,(b) less than one year has elapsed between the exit payee leaving the employment or office in respect of which a qualifying exit payment is payable and the event mentioned in paragraph (a), and(c) any other prescribed conditions are met.”
(a) the Scottish Parliamentary Corporate Body, or“(b) any”
“(j) in Part 11, section (Concessionary coal) (concessionary coal).”