Transparency of Lobbying, Non-Party Campaigning and Trade Union Administration Bill

Debate between Lord Cryer and Ian Murray

Wednesday 11th September 2013 Commons Chamber

[Ian Murray]

My hon. Friend is absolutely right. We will move on to clause 37 later this afternoon, when we will address some of the issues relating to confidentiality and the European articles. [Interruption.] The Leader of the House chunters from a sedentary position that we should speak to the amendments. As I understand it, Mr Speaker has grouped the stand part debate with the amendments, and I am addressing why I think clause 36 and part 3 of the Bill are deficient, which I think is perfectly appropriate.

I was talking about the Beecroft report’s ideological attack on working people and how the Government are making it easier to fire, rather than hire, employees. That is reflected in the thrust behind amendment 103— I say this for the benefit of the Leader of the House—and subsequent amendments in this group. The Government have yet again failed to produce any evidence whatsoever on what problem they are trying to resolve and what the impact will be on membership lists. Not only do they have no evidence, but, as I mentioned at the start of my speech, they do not even have an impact assessment for this part of the Bill and they have done no suitable consultation.

[John Cryer (Leyton and Wanstead) (Lab)]

My hon. Friend will remember that Adrian Beecroft appeared before the Enterprise and Regulatory Reform Bill Committee last year. When asked detailed questions, he could give absolutely no evidence whatsoever for what he was suggesting, yet some of those suggestions can be found in this Bill today.

[Ian Murray]

Absolutely, which is why we should be addressing those issues in the Beecroft report, because they influence part 3 of the Bill. Perhaps Ministers, rather than chuntering from a sedentary position, might at last answer some of these questions when they come to the Dispatch Box.

I was talking about the lack of suitable consultation. As far as I am aware, the Government have still not published an impact or cost assessment for part 3 —[Interruption.] The Minister says that they have, but it was not there at 10.30 this morning. They did publish assessments for parts 1 and 2 back in July. In fact, the equality assessment states:

“A full impact assessment will be developed after, and informed by, a period of targeted consultation and engagement of a range of experts.”

But the Committee is debating this Bill before any of that work has been either completed or formally published.

--- Later in debate ---

[Ian Murray]

That has absolutely nothing to do with the registration of 7.2 million trade union members. If an individual member of a trade union on that list has a complaint, I do not see any reason why they would not raise it.

[John Cryer]

My hon. Friend will be aware that the legal strictures on trade unions with regard to balloting are among the tightest in the world; they are certainly the tightest in the European Union. I can think of one ballot for industrial action that was ruled illegal because a comma was in the wrong place. The idea that trade unions—this is the notion suggested by the hon. Member for Huntingdon (Mr Djanogly)—are conducting fraudulent ballots left, right and centre is simply illusory.

Payroll Companies

Debate between Lord Cryer and Ian Murray

Wednesday 16th January 2013 Westminster Hall

[John Cryer]

I thank my hon. Friend. He makes a good point. The council that largely covers my constituency, Waltham Forest, faces some savage cuts, while we see billions—it is billions, by the way—disappearing down the Swanee, because HMRC is powerless to stop it. HMRC itself is facing cuts and has been for quite some time. It will face more and more cuts; its staff numbers are being reduced, so it is unable to police this behaviour.

I should point out that not all payroll companies behave as Hudson does. When Jamie Elliott began his report, he found companies that said, “We are not going to help you do this. This is inappropriate. We think that you are engaging in bogus self-employment, so we will not help you.” The majority, however, did not say that. The majority said, “Yes, we are more than happy to help you transfer people to”—using my words—“bogus self-employment.”

I have mentioned the more respectable payroll firms, but at the dodgy end of the market things can be even worse. There are cases of workers turning up for work and being told, “Although you have not signed or agreed anything, you are now self-employed. You are not employed by the company.” They are transferred without their knowledge. That may technically be illegal, but under the current circumstances and in such an uncertain industry as construction, many employees will not be keen to complain about an employer, which clearly does not think that much of them if they want to transfer them to being self-employed.

I have described a fairly straightforward sort of scam— I use the word advisedly—but another scam is the use of umbrella companies, which is rather more complicated. Workers remain employed, but by an umbrella company, which is in turn set up by the payroll company. The cost saving is made by a tax dodge that allows tax relief on employees’ travel and subsistence to be used to pay employers’ national insurance. Since employers’ NI runs at 13.8%, we are talking about a considerable saving. That is the incentive that payroll companies have to set up the umbrella companies that allow the dodge to take place.

A final example of the sorts of practice being engaged in is the use of offshore status. For example, International Subcontracting Solutions Ltd employs 24,000 supply teachers across the UK. Because it is based in the Channel Islands and is a payroll company, ISS is not liable to pay employers’ NI, although it does technically employ the teachers. At the same time, the recruitment agencies in the UK that actually find the jobs for the teachers are also not liable to pay employers’ NI. On all the fronts I describe, the Treasury is losing out in a big way—to the tune of billions of pounds.

My final point is in line with the intervention that my hon. Friend the Member for Liverpool, Walton (Steve Rotheram) made. The Elliott report puts the amount of money lost to the Treasury at £1.9 billion, but that only covers construction. It is an estimate, but it is pretty accurate. There have been no detailed reports, which is why I have concentrated on the Elliott report, but from what I can gather, such practices are spreading to other industries. I have received e-mails describing how they are spreading into the hospitality, catering and retail industries.

If we take all those industries together, my suspicion is that billions of pounds are being lost to the Treasury at a time when we are seeing savage cuts to public services left, right and centre. Every Member can cite cuts to services in their constituencies and local authorities used by the people who they represent, and yet all this money seems to be disappearing down the Swanee.

Thousands, certainly tens of thousands, and possibly millions of workers in the long term, will be deprived of basic rights at work, their holiday and sick pay, and their pension and redundancy entitlements. That will do only one thing: fuel a lack of confidence in the economic future of this country.

[Ian Murray (Edinburgh South) (Lab)]

I thank my hon. Friend for giving way just before he concludes his remarks. He has made a powerful speech. It is important to remember that self-employment and freelancing are good, but we are looking to tackle bogus self-employment. Is it incumbent on the Government to launch a full inquiry, through the Department for Business, Innovation and Skills, into this, not only for the sake of the employees and the Treasury, but because of issues in the construction sector such as blacklisting? People who work in the construction sector deserve an awful lot more from this Government. They deserve a full investigation of all the facts around their employment and future.

[John Cryer]

My hon. Friend makes a very good point. It would be a sensible solution for the Department to conduct an inquiry into the various tax dodges, particularly in construction, but in other industries as well; into blacklisting and all those slightly shadowy practices, some of which are straightforwardly illegal, some of which verge on illegality and some of which are straightforwardly legal; and into how it affects people and business and economic confidence.