Employment Rights Bill

Baroness Noakes Excerpts

2nd reading
Thursday 27th March 2025 Lords Chamber

[Baroness Noakes (Con)]

My Lords, this is a very bad Bill for many reasons, and I will have to ration myself to just two areas.

First, the Bill is unequivocally bad for businesses and therefore bad for growth. It is not pro-growth to impose £5 billion-worth of costs on businesses. It would be pretty bad if this Bill existed in isolation, but it is not in isolation; it is part of a triple whammy which involves the jobs tax, which will add over £20 billion to private sector wage bills, and the national minimum wage increases, which will add many more billions.

The Government seem to have forgotten that they need private sector businesses to grow if they are to achieve their overall growth objective. The economic impact analysis which accompanied the Bill claims the possibility of a small positive impact on growth, but the probability is a big negative impact, as suggested by the OBR in its spring forecast yesterday. For that reason alone, the Government should have killed this Bill at birth. The country cannot afford it.

In response to the triple whammy, most businesses are expecting to raise prices and reduce pay increases and employee headcount. That will lead to inflation, lower employment, reduced profits and reduced taxes. It will create an environment in which businesses will not invest, thus hobbling another leg of the growth ambition. A key plank of the UK’s ability to attract inward investment has been the flexibility of our labour markets. This Bill destroys that competitive advantage. It is an economic disaster zone.

SMEs are particularly hard hit by this Bill. The economic impact assessment is clear about this. Of course, anything which is bad for SMEs is also bad for growth, but policies which bear down excessively on SMEs are particularly destructive to the foundations of the way we do business in this country. At the last count, there were more than 5.2 million micro-businesses with fewer than 10 employees and a further 220,000 small businesses with 10 to 49 employees. Between them, they have nearly 13 million employees. Why would the Government want to put this huge group of employees at risk? I will be looking at amendments to this Bill to protect SMEs from its excessive burdens, and I look forward to working with the noble Lord, Lord Londesborough, on that.

My second area of concern is that the Bill is bad for some significant employee groups. For example, people with a history of health-related absence and young people with no track record will be less attractive as employees because of day-one rights and higher sick pay. There are many people who value zero-hours contracts, but they may be deprived of that opportunity because employers will be trying to avoid the risks of getting involved in conferring rights to guaranteed hours. This Bill will make life worse for many who want to work.

There are many aspects of the Bill which will need to be explored in detail. Your Lordships’ House has a responsibility to ensure that the Bill, as a minimum, does no harm. That will be a difficult task because it has deep flaws, but we must try.

Code of Practice on Reasonable Steps to be taken by a Trade Union (Minimum Service Levels)

Baroness Noakes Excerpts

Wednesday 6th December 2023 Lords Chamber

If the noble Lord, Lord Collins, decides to move his regret amendment, we will take the TUC’s advice and support His Majesty’s loyal Opposition.

[Baroness Noakes (Con)]

My Lords, I completely understand that the Benches opposite did not much like this legislation when it went through your Lordships’ House, as we have heard today, but it is the law of the land and has been passed by both Houses of Parliament. It seems churlish to hold out against a document that is only trying to help unions comply with its provisions.

The noble Baroness, Lady Bennett of Manor Castle, and the noble Lord, Lord Collins of Highbury, have listed a number of reasons for the code of practice to be rejected or regretted, as the case may be. I suggest that these reasons do not stack up. I refer to the reasons as specified in their amendments, as opposed to the broader political speeches that we have heard.

The amendment from the noble Lord, Lord Collins, says that the code of practice

“imposes significant new duties on trade unions”.

It does not. Paragraph 7 says:

“This Code imposes no legal obligations”.


It is just guidance. It therefore does not go beyond the scope of the 2023 Act, as the noble Lord’s amendment alleges. Put simply, his amendment is inaccurate. It acknowledges that the intention of the guidance is to “provide … clarification to unions”, but then complains that there are “significant areas of uncertainty”. Guidance, by its nature, will never be exhaustive. He seems to be calling for absolutely certain rules and not guidance, but this is guidance. Much will depend at the end of the day on the circumstances, and the courts—not the Government—will determine whether a union has taken appropriate legal steps to stay within the law.

The noble Baroness, Lady Bennett, did not go through her list of complaints when she spoke to her amendment, but I believe it is similarly misplaced. Her amendment says that the guidance can lead to fines on trade unions or make them into “enforcement agents”. She also complains that the draft guidance reduces workers’ rights. The guidance simply cannot do these things—it is just guidance.

The complaints of the noble Baroness might be more accurately targeted at the minimum service levels legislation itself, as we discussed earlier. That is now the law of the land. It is not the time to redebate those issues, which took up so much of your Lordships’ time in the last Session.

Lastly, the noble Baroness’s amendment says that the guidance somehow “breaches international labour commitments”, which, again, as guidance, it cannot do. Our obligations under the ILO conventions do not prohibit us from setting minimum service levels and certainly do not prohibit us from issuing guidance. I hope—though without much hope at all—that neither of the noble Lords will be pressing their amendments, as they really do not make sense.

[Lord Cromwell (CB)]

My Lords, good grief, how did it come to this? I come at this at a slightly different angle as a businessperson, and I know that the Minister has much business experience. However, in business, a great deal of time and study goes into how to motivate people to work productively. I find it difficult—and I wonder if I could ask the Minister whether he shares my view—that passing a law that in effect forces people to work is hardly the way to go about things, and is, in fact, a sign of failure. It is certainly a sign of regret.

Economic Crime and Corporate Transparency Bill

Baroness Noakes Excerpts

Consideration of Commons amendments
Monday 11th September 2023 Lords Chamber

[Lord Agnew of Oulton (Con)]

My Lords, I rise briefly in support of my noble friend Lord Faulks on this amendment. I am particularly grateful to him; I was involved in the earlier amendments, but I realised that it needed a premier division lawyer rather than a second division entrepreneur to get this through.

In our discussion with Ministers, we were often told that the enforcement agencies did not want this; that seemed disingenuous to me. I now have some information. For example, law enforcement agents have shown a strong appetite for cost protection and civil recovery. The chief capability officer of the Serious Fraud Office told the economic crime Bill committee that the SFO would like to see this, while the head of the National Economic Crime Centre told the same committee that they found cost protection “an attractive proposal”. I do not think that is a searing insight. Spotlight on Corruption has identified 60 high-risk cases, with the potential of £1 billion of frozen assets, and the chilling effect is palpable among them.

I respectfully disagree with the Government on this. I am grateful to my noble friends the Ministers who have spoken several times to all of us, but I think they are on the wrong side of logic.

[Baroness Noakes (Con)]

My Lords, I have some very real concerns about the impacts of the new failure to prevent offence on small and medium-sized entities. If my noble and learned friend Lord Garnier’s Motion E1 is agreed to, I think it could be very significant. I believe that the other place was wise to restrict the offence to larger companies only. Setting the threshold at the micro-entity level would still leave very many small and medium-sized entities within the scope of the offence.

I did try to find out how many companies would be affected. My noble friend the Minister said 450,000 companies would be brought within the net of the offence. According to Companies House statistics, around 3.1 million active companies filed accounts last year. Of those, 1.6 million were for micro-entities, and would therefore be excluded, but 1.4 million were for small companies that took advantage of the audit exemption. That, very broadly, is the group of companies that would benefit from the changes made by the other place; it is obviously rather more than 450,000. Whatever the number, there will certainly be regulatory costs for those companies, whether 450,000 or 1.4 million. My noble friend the Minister has given his estimate of what those costs will be. I have never placed much faith in estimates made by Governments of the direct costs of regulatory burdens that Governments try to impose. I generally put a multiplier against them to arrive at a more realistic figure.

However, I believe the most important cost is the opportunity cost that is imposed by regulation. Every time a new regulation is imposed, the people who run small businesses have to spend time away from thinking about their core activities, which should be wealth-generating. Every moment spent thinking about whether they have reasonable prevention procedures in place, or implementing those procedures, is a moment spent not thinking about how to grow the business or how to make it more profitable. Large companies have specialists to cope with all this. Small businesses often have no one beyond the proprietor of the business itself, but they are the very people who are supposed to be spending their time growing their businesses, thereby helping the UK economy to grow—and my goodness me, do not we need growth in our economy?

The cumulative effect of incremental regulation on individual businesses is huge, as any small businessman will tell you, but the cumulative opportunity cost for those businesses of missing out on that growth, and the impact that will have on UK plc, simply cannot be ignored when we are looking at any form of legislation that imposes burdens on businesses. I urge noble Lords to accept the pragmatic solution that the other place has put forward.

[Lord Hope of Craighead (CB)]

My Lords, I am greatly assisted by the correction made by the noble Lord, Lord Faulks; I had great difficulty in understanding the amendment on first reading. Now that he has corrected it, I would like to say from the point of view of a Scots lawyer that there is nothing startling in the proposition that is made. We in Scotland are quite used to the normal routine that law enforcement agencies are not liable in costs for the proceedings that have been taken, probably for the reasons that the noble Lord has clearly expressed.