Employment Rights Bill

Debate between Baroness Stowell of Beeston and Lord Londesborough

Committee stage
Wednesday 21st May 2025 Lords Chamber

[Baroness Stowell of Beeston (Con)]

My Lords, I briefly add my support for Amendment 102 and will pick up on the comments of the noble Baroness, Lady Garden, on her committee’s recent visit to the Blackpool and The Fylde further education college. I declare an interest as a commissioner at the Social Mobility Commission, the chair of which is also the principal of the FE college that the committee went to visit. From the perspective of social mobility and the importance of apprenticeships, any measure that would deter the creation of quality apprenticeships that are successful is a bad one, and I therefore support this amendment.

[Lord Londesborough (CB)]

My Lords, I rise to speak to Amendment 102 in the name of my noble friend Lady Wolf of Dulwich and pitched so perfectly by my other noble friend Lord Aberdare—I realise that that sounds as though I only have two friends in this House, which I hope is not the case.

This amendment addresses a consequence of the Bill that will significantly reduce the willingness of employers to hire young people as apprentices—a consequence that I am sure was neither anticipated nor desired by the Government or indeed the Bill’s drafters, which is strange because this Government are acutely aware of the skills shortages facing this country and the need to address them. It was notable that, in introducing the Government’s new immigration strategy last week, both the Prime Minister and the Home Secretary emphasised the need to invest in skills so that the immigration system

“no longer ignores the millions of people who want the opportunity to train and contribute”.

They also highlighted that, in sectors like engineering, apprenticeships have “almost halved” in recent years.

We only very recently debated the Bill, now an Act, that abolishes the Institute for Apprenticeships and Technical Education. That change was not introduced because the Government are against apprenticeships; on the contrary, this is part of a reform that is creating a new integrated strategic body, Skills England, as we have heard, to meet, in its own words,

“the skills needs of the next decade across all regions”,

and apprenticeships are a central part of Skills England’s brief.

Young people do not need persuading of the value of apprenticeships. On the contrary, there is huge excess demand, as we have heard. Of those 17 to 18 year-olds who make a serious effort to find an apprenticeship, only 25% succeed. Young people typically start off on what are called intermediate apprenticeships, but these are in decline too, in absolute numbers and proportionally —crowded out by so-called higher apprenticeships, which are equivalent to university qualifications.

Today, more and more of our apprentices are older. Around half of apprenticeship starts now involve people over the age of 25. Critically, large numbers of older apprentices were already working for their employer before they became an apprentice. This is especially true of large employers who pay the apprenticeship levy, who account for a growing proportion of apprenticeships. So, if the Government are going to achieve their aims, we need to have far more openings for young apprentices —but there is a serious danger that the Bill will make large employers even more inclined to give apprenticeships to existing employees, with whose employment they take no risks, rather than hiring new young apprentices.

What about the young people who make up the growing number of NEETs? SMEs are the main employers of young apprentices and absolutely central to the economies of less-advantaged areas. But their apprenticeship recruitment has been plummeting. SME business owners complain that apprenticeships, as we have heard, have become more and more burdensome and bureaucratic, and just too expensive. So if, on top of this, young apprentices are entitled to full employee rights from day 1, many more employers, especially SMEs, will surely just walk away.

Taking on an untested person is always risky, and this Bill will make it much more so. In many other European countries, apprentices have a specific distinctive legal status. In the UK, they do not; they are simply any employees who have received an apprenticeship training contract. This Bill’s provisions will apply to them all, whether they are an 18 year-old training as an electrician or a 50 year-old on a leadership apprenticeship. These are the dangers of a one-size-fits-all approach, as I have already pointed out numerous times in Committee.

Employment Rights Bill

Debate between Baroness Stowell of Beeston and Lord Londesborough

Committee stage
Thursday 8th May 2025 Lords Chamber

[Lord Londesborough (CB)]

My Lords, I will speak to Amendment 63. I agree that the impact of Clauses 1 to 8 will be especially felt by these three sectors: hospitality, retail and social care. But, to be frank, I would not stop there; I advocate expanding this impact assessment, not only to small businesses and micro-businesses—noble Lords would expect me to say that—but to all key sectors in the economy. There will be huge employment variations sector by sector, and they need to be analysed and understood. As we keep hearing, one size does not fit all—although the Bill has a different view on that—and we have the issue of “mind the gap”.

Two other industries that certainly deserve such assessments are the creative industries, which we will debate on another day, and the gig economy. Some very disturbing numbers are already coming out of membership surveys from bodies such as the Federation of Small Businesses and the Institute of Chartered Accountants. I will share two bits of data from the ICAEW’s latest quarterly business survey for the first quarter of this year. It says that 53% of its members expect that the Bill will

“reduce their plans to hire permanent staff”,

and that 40% anticipate greater use of outsourcing because of the Bill—that is a very significant number.

What does this mean? It means—it is already happening—that employees will be coming off payroll and going into freelance and self-employed roles. We have an amendment coming up in many days’ time, or probably weeks; I will not read out the names of my noble friends who are behind it, but it is Cross-Bench and Liberal Democrat-sponsored and relates to the establishment of a freelance commissioner office. I think the Government may have very little choice on this, because the demands for the services of that office are going to go up exponentially, partly because of this Bill and also because of the national insurance contributions Bill. I will not repeat all those arguments.

I come to the second unforeseen consequence—although, frankly, these are not unforeseen, are they? They are foreseen. We can actually say with some certainty that the Government are encouraging the offshoring of jobs from the UK. This trend has been going on for decades, but is it really the objective of the Government, particularly for lower-paid and entry-level roles, to see a percentage of those jobs going off to countries such as India, Vietnam, the Philippines, Romania or Moldova? I am not against offshoring, but I think you have to be very careful about being seen to be encouraging it, and I believe the Bill is guilty of that.

On the assessment, which we hope will happen, the area that should be looked at in greatest detail is the impact on part-time jobs. We have heard already about the young graduates and students, but I will speak up also for older workers. Those of us here who sit on the Economic Affairs Committee—I see the noble Lord, Lord Davies, here—will be aware that we are conducting an inquiry on the economics of an ageing society. If the Government are to achieve their noble objective of raising the economic activity rate from 75% to 80% across all age groups, they will have to tackle the 50 to 70 year-old cohort.

In order to get people back into work, not just those who took premature retirement but those who have been on benefits for a long time, we will have to be far more flexible about creating part-time work, and I am afraid that the Bill is likely to deter the creation of part-time roles. So that is another area that I believe the impact assessment should be looking at, which is not just by sector but by type of job.

I am told by my friends in the recruitment industry, if I can call them that, that there is already a shift in hiring from permanent to interim, and that trend started at the beginning of this year and is accelerating. Again, national insurance contributions have pushed employment in that direction and the Bill threatens to do the same.

My final point, talking about assessments, is that HMRC may well want to conduct one to discover that its projected national insurance contribution tax revenues will, as a result of the Bill, take a significant hit as employees start being taken off payroll and moved into self-employed, part-time or even offshored roles.

[Baroness Stowell of Beeston (Con)]

Perhaps I might intervene briefly on this group. I support Amendment 63 but, like the noble Lord, Lord Londesborough, I wonder whether it is too modest in scope. As I said when I spoke on the last day in Committee, I am sympathetic to the kinds of effects that zero-hours contracts or some of the different kinds of practices that we see now have on employees in these businesses, which are often at the lower end of the pay scale.

However, I am very struck, by listening not just to this debate but to the debates on the various different things that we have been discussing this afternoon, that what we do not seem to be taking account of—or rather, to be more specific, what the Government do not seem to have taken account of in bringing forward this legislation—is that a lot of the practices that they are trying to remove or mitigate are the consequence of other things that have been introduced in the past which have been well intentioned in support of low-paid workers but are now creating other things. For instance, although it is going back some time now and various other things have happened since, I think about the arrival of tax credits when Gordon Brown was Chancellor. That led to people wanting to reduce their contracted hours because of the impact on their various benefits.

So when I hear people say that some of these measures—or, rather, the removal of some of these practices and various other things in the Bill—start to disincentivise people either being offered more hours or whatever, I worry that, given the way in which the Bill has been introduced and what feels like inadequate assessment through the proper stages—Green Paper, and all that sort of thing—we are creating yet more problems, which will then lead to the need for yet more legislation, which will never get to the heart of what we are trying to do here, which is to create an employment economy that is fair for employees and people do not feel that they are being exploited but have the flexibility that they need, and where employers, too, have the freedom and independence that they absolutely need to be able to employ workers and grow their businesses to contribute to the fundamental agenda, which is a growing economy that is fair to everybody concerned.