Employment Rights Bill

Lord Fox Excerpts

Committee stage
Tuesday 29th April 2025 Lords Chamber

Moved by

[Lord Fox]

1: Before Clause 1, insert the following new Clause—
“PurposeThe purpose of this Act is to—(a) improve the fairness and security of employment;(b) facilitate cooperative arrangements between employers and workers, including the protection of workers’ rights and wellbeing;(c) make provisions about pay and conditions in certain sectors; (d) facilitate constructive workplace relations between employers and workers representatives, including trade unions;(e) make provisions about the enforcement of labour market legislation.”Member’s explanatory statement
This amendment inserts a new Clause at the beginning of the Bill to set out its overarching purpose and provides a framework for understanding the aims of the legislation.

[Lord Fox (LD)]

My Lords, in moving Amendment 1, I will also speak to Amendments 283 and 327.

In February 2023, Keir Starmer launched Labour’s five missions. The first is to get the UK’s economic growth to the highest sustained level in the G7 by the end of Labour’s first term. I need hardly remind your Lordships that it is with that mission, and the four others, that the Labour Party went on to win the general election with a majority. Since then, the Government have unwisely raised employers’ NICs and introduced this Bill. It is through those lenses that business views the Government’s attitude towards it.

Amendment 1 is an attempt to set this legislation in context, and I thank the noble Lords, Lord Sharpe of Epsom and Lord Hunt of Wirral, for also signing it. It was quite difficult to come up with wording that the PBO would let past its eagle eyes, but I am sure that the Minister will not find much of this objectionable. For example, proposed new paragraph (a) sets out the need for “fairness and security” as drivers for the Bill; I am sure the Minister will agree with that. Proposed new paragraph (c) is well represented in this Bill, as large parts of it set out new rules around trade unions.

However, I will spend some time discussing proposed new paragraphs (b) and (d). I cannot read this Bill without the feeling that it envisions just two states of employment—happy workers represented by unions and abject employees working in non-unionised concerns—but, of course, that is not true. Even in the very welcome conversations with the Minister, there seems to have been little recognition that the vast majority of people in this country are in employment where the facilitation of co-operation agreements between employers and workers is not automatically dependent on their union status. Let us remind ourselves that, for most people, those co-operative arrangements work pretty well, and that the proportion of UK employees who are trade union members is around 22% in this country. Constructive workplace relations can be forged in many ways other than via direct representation of employees by their unions.

When the Minister generously gave her time to meet with me on this Bill, she explained that discussions between government, employers’ organisations and the unions had been constructive and amicable. I am sure they were, but those selfsame employers’ organisations have also raised serious alarm over this Bill. The British Chambers of Commerce, the CBI, the IoD, the FSB and Make UK all sent a joint letter, which I am sure all noble Lords have received and read. The B5, as it is known, is not alone: all manner of industries—including hospitality, food and drink, and employment agencies—have raised serious concerns about the Bill. The telling phrase in the B5 letter is:

“For us the challenge has never been what the government wants to achieve, but the unintended consequences of how they implement it. Unfortunately, the Bill locks in several irreversible policy directions that will force business to make difficult choices between jobs, investment and growth”.


The Minister may well say that she is getting equally forceful lobbying from the unions. Indeed, I believe that the noble Lord, Lord Hendy, will provide ample evidence of that with his later amendments. She may say that the Government are pitching this Bill in the middle of these respective positions—and she may claim, on that basis, that the Bill is in the right place. However, Governments are elected not to work out the average position of policy but to make the right decisions. I ask the Minister to take on board the concerns of business and, importantly, to recognise that there are issues in this Bill, which, if not addressed, will impede the Government’s chances of delivering their mission of economic growth.

Small and medium-sized enterprises are the backbone of the UK economy, accounting for a huge proportion of the business population and employing approximately 16.7 million people—around 61% of private sector employment, according to data from the Federation of Small Businesses. In that regard, the Minister should recognise that the impact of many of the measures in the Bill will disproportionately affect small and medium-sized businesses. These smaller businesses have neither the administrative horsepower nor the reservoir of human energy required to meet the collection of tasks that the Bill will introduce. Given their economic footprint and vital role in local communities, SMEs must be central to the purpose of the Employment Rights Bill. Placing SMEs at the heart of the Bill’s purpose offers an opportunity to foster better employment relations while supporting enterprise, resilience and long-term growth.

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[Lord Fox (LD)]

My Lords, I thank all noble Lords for their contributions to this debate. The noble Baroness, Lady Carberry, may be relatively new to this House, but she is not wrong that purpose amendments are often the source of great opprobrium across your Lordships’ House—and I am afraid I am something of a serial offender in that regard. But the aim of this amendment has certainly partially been achieved, in that I think we have started the process of flushing out some of the issues.

I have a great deal of respect for the noble Baroness, Lady O’Grady, and I think she gave a very spirited speech, but I think that she gave a spirited speech to the speeches that came after hers and not to mine. If she reads, in tomorrow’s publications, the words of what I said, I think she will find that at no point did I speak against the Bill. I was seeking through this process to achieve two things from the Benches opposite. First was a recognition that there is much work to be done to bring employers into this process, and I did not hear that empathy from the Benches opposite or from the Minister. The second point on which I was seeking recognition is that a lot of this legislation is arriving late. The Minister said she would give this House an adequate time to consider it; it is already too late for it to be adequate time, because this stuff is arriving well past due date. We are not getting adequate time on the programme that we are currently getting, and there needs to be a recognition of that. If the Government want to reach across the House and support all the good things in the Bill, then they have to have some empathy about the things that are wrong with it and with the process of the delivery. That was my main purpose in this purpose amendment, and it has not achieved that purpose to date. I hope that, going forward, we can get some recognition of what is required.

On Amendments 283 and 327, I thank the noble Baroness, Lady Coffey, who I think got my point: we need an operator’s manual for the Bill. The Minister absolutely cemented the reason why we need one, because she then went on a journey across several different bits of legislation and all sorts of codes and practices and stuff. If I am sitting in the HR department of one person in a business of 12 people, I need a guidebook that takes me to the right guides and the right legislation. The information may already exist, but I do not need to go on a website trawl to find it; I need a signpost that takes me to the places that I need to know to operate this legislation when it becomes an Act. That is what Amendment 283 is seeking to achieve. If this stuff already exists, then it will not hold up the process; it is merely a question of bringing it together and saying, “You get this bit there and that bit there”. The more that can be done within a code of practice to deal with that, the easier it will be for businesses to comply, and the easier it will be to avoid a proliferation of tribunals, which I am sure no one in this House is seeking to achieve. With that, I beg leave to withdraw Amendment 1.

Amendment 1 withdrawn.

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I urge the Minister, if not to accept this amendment, at least to commit in Committee to including a clear definition of low-hours contracts on Report. If the low-hours threshold is set at the right level, the Bill will indeed succeed in addressing potentially exploitative practices—which, as noble Lords on the other side of the Committee have rightly pointed out, good employers want to be addressed as much as they do. The Bill can do so without dismantling the legitimate employment practices that work—for our economy, for our service industries, and, most importantly, for millions of working people across the UK. In that spirit, I commend Amendment 8 to your Lordships.

[Lord Fox (LD)]

My Lords, it is with some trepidation but some pleasure that I follow that speech. I rise to speak to Amendment 4, which is in my name, and to offer support to Amendments 7 and 15 in the name of my noble friend Lord Goddard, although he will speak to those on his own account.

Speaking on the previous group, I said that there should be a change in the polarity of the guaranteed hours offer from an obligation to offer to a more streamlined right to request. We have heard in the previous two speeches that the aim is for this offer to be made to people who want it rather than there being an obligation to make it to everybody, when we know for a fact that a large number of people who will get the offer will not want to take it up. It is unnecessary activity when there is plenty to do in business. It is a very simple principle, and I genuinely do not think it subverts the intention of the Bill, in the same way as I think the noble Lord, Lord Wolfson, was trying not to subvert the purpose of the Bill but to help it succeed while helping business at the same time. In a sense, that reflects the point I made before withdrawing Amendment 1. It is really asking the Government to have some understanding of how these things will be delivered on the ground, in the workplace. That is why the previous speech was so helpfully revealing.

I think that a large part of the early part of this Bill is designed to deal, in essence, with a number of employers who the Government have in the back of their mind as not doing the right thing and not achieving what we would all like to achieve. I understand that. Unfortunately, it is dragging the whole business programme, from microbusinesses right up to huge businesses, into a series of practices to crack those particular nuts. Later in Committee, my noble friend Lord Clement-Jones will introduce Amendment 318, which targets the sort of employer who I think the Government have in their mind as bad or exploitative. It would create, in essence, a new class of employee, the dependent contractor, which is in fact in many cases what we are starting to look at. It would sharpen the regulatory focus, particularly on some elements of gig economy employers, but avoid the heavy-handed approach that we are in danger of using with this Bill.

Amendment 4, and I think there are a couple of others that are very similar, would simply reverse that polarity to: if employees ask for it, the employer is obliged to deliver it. Some obligation on employers occasionally to remind their employees that they are entitled to ask for this would help the process.

As for the rest of the group, I will listen with interest to the noble Lord, Lord Sharpe, when he comes to his amendments. I think much of this will be addressed also when we get to the issue of freelancers and to the amendment tabled by my noble friend Lord Clement-Jones, so I imagine this is not the last time that we will have some elements of this discussion, but some sign from the Government Front Bench that they understand that something should and could be addressed in this area would be a good starting point.

[Baroness Lawlor (Con)]

My Lords, I rise to speak in support of Amendments 3, 6 and 9 in this group, tabled by my noble friend Lord Sharpe of Epsom and supported by my noble friend Lord Hunt of Wirral. I also support Amendment 8 tabled by my noble friend Lord Wolfson of Aspley Guise, but for different reasons. I will not speak on that, but I like the idea of a low-hours contract. I will speak about zero-hours contracts, because I do not believe they are getting a fair look in.

These amendments would give workers the right to request, rather than putting an obligation on employers to guarantee hours. I think they are worth while and worth supporting. In the labour market this year, there are 33.9 million people employed. Of them, 1.3 million are on zero-hours contracts. There has been an increase since 2000 of 805,000 people on this type of employment contract. This is 3.1% of employment in the UK. Most are young people in the 16 to 24 age group. This is a popular way of working; the figures speak to that. There has been far more significant an increase in this type of contract than in the overall type of working arrangements chosen by employees and their employers.

Much of the popularity lies in the flexibility on both sides. The evidence is that the majority of people on zero hours, 60%, do not want more hours, although some, 16%, do. Amendments that would allow an employee to request guaranteed hours as distinct from obliging the employer to guarantee certain hours seem more in tune with people’s wishes. Of those on zero-hours contracts, around 1 million are young people. However, 946,000 16 to 24 year-olds are not in employment, education or training; that is around 50%. Yes, people on these contracts may work fewer hours than other workers—I gather the average is around 21.8 hours a week compared with 36.5 hours for all people in employment—but is it not better that there are jobs which people want and can get, particularly young people who may not yet be in the labour market or who may have been thrown out of the labour market or left it for one of the many reasons we hear about it? I am afraid that it seems from the Government’s approach that they do not think so.

This Bill and Clause 1 must be seen in the overall context of the party opposite’s approach to labour market and economy reform. Not only is the NIC tax hike on the productive sector along with the decrease in the NIC threshold taking £24 billion out, affecting 800,000 businesses and their ability to employ people and offer opportunity to the 16 to 24 age group, but other costs have been piled high, one on top of the other, since the party opposite came to power. Of those employed in December 2024, 27.8 million were in the private sector and 6.14 million in the public sector. If employers are obliged to move to guaranteed hours, that will most likely serve to cut the number of people productively employed under these arrangements, with a corresponding decrease in output and growth. Surely these amendments speak for themselves, and a Government whose priority is to increase economic growth should accept them.

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[Baroness Stowell of Beeston (Con)]

My Lords, I was not going to speak on this group but the noble Lord, Lord Barber, has painted a horrific picture of the impact of zero hours on some workers. For some people I know who have been on the receiving end of zero-hours contracts, sometimes it has been even worse. I know of people who have been required to turn up at work at 4 am for a shift and been sent home again at 5 am, so I know how bad this is. However, my noble friend Lady Verma makes a strong argument as to why just removing all the measures, which would happen by virtue of the Bill, would also have a detrimental effect.

So far, I have not heard from those on the other side a response to the argument put forward by my noble friend Lord Wolfson, which is that we have to find a way forward on this matter that addresses the employment rights issue, which the Minister has said is the purpose of this legislation, but also allows business to deliver the kind of economic growth that the Government are also saying is the purpose of the Bill.

The noble Lord, Lord Empey, is not in his place at the moment, but we have to take heed of the point that he made in the debate on the first group: we should not be in a situation where this is a stand-off. Hopefully, through some responsiveness and empathy from the Minister, we will find ourselves in a position where the Bill will not have a detrimental effect on business but will address the worst work practices, as described by the noble Lord, Lord Barber.

[Lord Fox (LD)]

My Lords, I think I am allowed to come back in Committee. I want to respond to the noble Baroness, Lady Carberry, because I probably did not articulate terribly well what I was proposing. I certainly was articulating a right to request, but I was also assuming there would be an obligation to meet that request, given certain thresholds that the noble Lord, Lord Wolfson, was talking about. It would not be an option for the employer as long as the request was within those thresholds. I suspect that is not what the noble Baroness thought I was proposing, and I just wanted to set the record straight.

[Baroness Coffey (Con)]

My Lords, I support Amendment 8. I commend my noble friend Lord Wolfson on his excellent speech, bringing the reality of employing so many people into the heart of this debate, along with the constraints and the concerns being raised, while still recognising that I understand why so many people consider casual work and zero-hour contracts to be particularly poor when people are trying to have certainty of employment over some time. I also support Amendments 7, 12 and 13—in essence, any amendment that refers to specifying the reference period in the Bill.

I say that because, when thinking of 26 weeks, I think in particular of the hospitality industry in coastal areas. There are a number of employers around the country who literally shut down their businesses, or move to a much lower level of needing people, at certain times of the year, and then, in the summer, are desperately trying to find people. We need to give flexibility. The 12 weeks simply does not recognise that, as has been referred to. It is perfectly usual for people to work at different points throughout the year, potentially in on annualised-hours contract, but varying the number of hours expected to match the demand of customers requiring a particular service. I fear that the 12 weeks does not address that sort of business.

Across the country, 2 million people work in the hospitality industry. It is one of our biggest industries, and for many families it is key to how they support their household income. For the flexibility that employers want, and—thinking of how many people lose their childcare at certain times of the year—for employees to have flexibility around their hours worked, bringing in casual staff is a key element in how employers keep those businesses going.

There is another element that needs thinking through. While I appreciate that the Government seek to reduce the number of agency and bank workers in the NHS, let us not get away from the fact that, unfortunately, many NHS trusts are actually terrible employers. A lot of people leave or reduce their permanent contracts because they simply cannot get the flexibility that they need working in the NHS. That could be for caring reasons, for all sorts of people—it does not matter whether it is men or women; people provide care to their families and to their friends. I am concerned, and I intend to discuss further with NHS Professionals how this will impact on the NHS fulfilling its expectations for people right across the country. I appreciate that it is not simply NHS Professionals; many individual trusts have their own bank. That is intended to provide flexibility based on need, and recognises that simply not everybody can work the NHS shifts expected.

Thinking of the 26 weeks or the 12 weeks, I am also concerned that, at the other end of the Corridor, 650 Members of Parliament are all individual employers. They have to sign contracts, which are provided, but when people are ill or go on maternity leave, MPs can and do take people on through certain term contracts. I am concerned that there will be unintended consequences for the provision of services. As a real example, if you had to guarantee hours beyond when the employee came back, you could end up in a situation that you simply could not manage.

It is for those reasons that we need to think very carefully about the reference period when we are considering the different employment situations that small employers find themselves in, as well as the large sectors, such as hospitality and retail, which have already been discussed.

Steel Industry (Special Measures) Bill

Lord Fox Excerpts

3rd reading
Saturday 12th April 2025 Lords Chamber

[Lord Fox (LD)]

Even more briefly, I hope, I thank both Front Benches for facilitating an open and very clear debate, which proceeded in the right spirit. I associate myself with the Minister’s list of people to thank. I reiterate what I said at the beginning to the House authorities and everybody across the House. Today has been incredibly smooth and like a normal working day, which is very much to everyone’s credit. We should all be very grateful. Finally, I thank Humphrey Amos in our Whips’ office, who has kept us all in line.

Steel Industry (Special Measures) Bill

Lord Fox Excerpts

Committee stage
Saturday 12th April 2025 Lords Chamber

[Baroness Coffey (Con)]

My Lords, I will speak to the amendment tabled in my name. I am conscious of the extraordinary powers that are being granted to the Secretary of State today.

I will briefly speak in response to the amendment tabled by the noble Baroness, Lady Freeman of Steventon. It is my understanding, having been in government, that anything in the name of the Secretary of State can be automatically delegated to a civil servant, but it cannot go beyond that. As we have seen in a number of cases, civil servants already have some powers to gain entry, but only in relation to specific Acts of Parliament—so perhaps this amendment would give a wide-ranging element.

This is clearly not an occasion to use the Civil Contingencies Act, but something that surprises me about this Bill is that the powers being given to the Government and the Secretary of State today are extraordinary and go way beyond what happened with the Coronavirus Act 2020. The inspiration for my amendment comes from the Bill that was presented to Parliament then. It set out that, to have scrutiny, a report would be put forward by the Secretary of State—over several periods, not just a year—and that there would be a debate on that report. Having a report matters because it would bring together how the powers have been used: have they been used in the way that both Houses anticipated? It may even extend to the provision of how the finances would be distributed for the regulations we have yet to see.

Overall, it is important that, when we give these powers for just one industry—I guess that if we were to name the company it would end up being a hybrid Bill, so that has been deliberately avoided to make sure that it covers the entire steel industry—we should be able to have regular discussions, not simply because this is the steel industry but due to the scale of the powers being granted. To that end, that is why I have literally lifted, with a bit of adjusting, what happened in the Coronavirus Act. Frankly, for something that took over our country in such an unprecedented way, I hope that the Government would concede to think carefully about how they will report back to this House and how this House can be involved.

[Lord Fox (LD)]

My Lords, I will speak to Amendment 5, which is in my name and that of my noble friend Lady Brinton.

The whole House heard my contribution during the take-note debate, and I am grateful for the subsequent supportive comments that noble Lords made to me afterwards. Amendment 5 reflects that contribution. As noble Lords can see, it calls for a debate in Parliament after six months. That would be a substantive debate on which the House could vote if it so decided.

The whole House also heard me pledge to work constructively with the Government to get a solution to the question of giving Parliament an opportunity to debate a possible continuation or cessation of these emergency powers. I hope that the constructive discussions we have had over the past hour or so will bear fruit and that the Minister will be able to accept the spirit, if not the letter, of Amendment 5 from her Dispatch Box. Like the noble Baroness, Lady Coffey, we too have, in a sense, lifted experience from Covid, but—with all due respect to her—we believe that Amendment 5 offers more flexibility to the Government while also giving the oversight that Parliament needs at a level that is not overbearing.

These are emergency powers and periodic debate is essential. Equally, the Minister called for sufficient flexibility for the power to be either kept or discarded. We should recognise that there will be times when this may need to be turned on and turned off, and the process I propose would allow that happen. Our amendment provides for that flexibility while also somewhat enhancing parliamentary scrutiny. I hope that the Minister can reassure your Lordships that she agrees with us.

[Lord Carter of Haslemere (CB)]

My Lords, I will make a brief supplementary point to the points made by the noble Lord, Lord Fox. I cannot support a sunset clause of the sort proposed by the noble Lord, Lord Hunt. That would cause these provisions to cease altogether after 12 months, and I think these provisions are necessary—albeit very draconian, as has been accepted.

I would have gone for a different option that combines a sunset provision with a debate, of the sort that we used to have with the Prevention of Terrorism (Temporary Provisions) Acts, year after year, from 1989. We would have a clause providing for the expiry of the provisions after a certain period—be it six or 12 months—subject to renewal by an order subject to affirmative resolution. That would mean there would then be a debate in each House and approval would be required for the provisions to continue. We would have a debate but would also have the provision for expiry if the Houses voted for that. That is not here, but I am reassured that the noble Lord, Lord Fox, thinks that his amendment could procure a vote, because that is the key to this, with these powers being so draconian.

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Tabled by

[Lord Fox]

5: After Clause 9, insert the following new Clause—
“Debate on provisions of this ActWithin six months of this Act coming into force, a Minister of the Crown must, in both Houses of Parliament, table a motion for debate on the continuing necessity of the provisions contained in this Act.”

[Lord Fox (LD)]

My Lords, I would just like to say a few words. I first thank the noble Lord, Lord Hunt, for his kind words—which I had not expected—but, mostly, I thank the Government Front Bench, in particular the Chief Whip, for the constructive discussions that we have had, which enabled the Minister to say the things that we hoped she would say. The point is that we understand the need for flexibility, but we also understand the need for parliamentary scrutiny. I hope that, between us, we have got to that point, thanks to the flexibility and the scrutiny that we have had over the past few hours.

Amendment 5 not moved.

Steel Industry

Lord Fox Excerpts

2nd reading
Saturday 12th April 2025 Lords Chamber

[Lord Fox (LD)]

My Lords, it has been an unanticipated pleasure to have a debate with noble Lords today. Many of us following the British Steel saga expected to find ourselves debating the issues in your Lordships’ House at some point, but I do not think we expected to debate them today. I will not comment on how on earth this scramble happened, but, like the Chief Whip and others, I thank the House authorities, Black Rod and her team, and all those across the House who made this debate possible.

The noble Lord, Lord Hunt of Wirral, with his characteristic hubris, made remarkable accusations—remarkable because the decline of the steel industry has been largely under the auspices of his party. Years of neglect and drift have happened on its watch and that has led to the crisis that we now see today. I do not think that the Government should take any lessons from that party, and I do not think that they will.

Having seen the Bill for the first time just a few hours ago—I thank the Minister for her characteristically clear explanation and her letter—I think it is a Bill that gives the Government of the day very strong powers. It is a shame that we should be rushing it through, but we on these Benches understand why the reason for haste is there. Time is now of the essence. The future of the UK’s last blast furnaces at Scunthorpe steelworks hangs in the balance. Closure would bring British virgin steel production to an end, as noble Lords have set out.

As we have heard and read, Scunthorpe’s Chinese owner, Jingye, has turned down offers of help and declared the Lincolnshire plant unviable. President Trump’s tariffs seem to have been the final straw that exposed the remaining elements of the British steel industry to a harsh global reality. Perhaps those in the past who have spoken volubly and favourably on the merits of Trump II would now like to reflect on a global trading environment with higher tariffs than in living memory, and that is after the 90-day suspension.

Owning and running a steel business should be a long-term enterprise; it should be measured in decades, not months. Scunthorpe’s owners since 1988 include the British-Dutch Corus partnership, the Indian Tata Steel conglomerate, then Greybull Capital and finally Jingye. For the latter, Scunthorpe has been a bit-part player in a global multinational with strong Chinese Government links, and Jingye seems happy to walk away from the Government’s £500 million offer to keep Scunthorpe open. But steel is not a bit-part player in our industrial economy; if Britain is to have a green and long-term industrial strategy, and if it is to have a defence industrial strategy, it needs steel.

Finally, after years of successive Governments producing piecemeal temporary fixes, we reach the crux. It is now or never, and nationalisation seems to be the only route to some sort of salvation. Steel has been here before, as my noble friend pointed out, but, of late, nationalisation has been anathema. Perhaps we should not be so squeamish. As my noble friend pointed out, the French, Irish, Danish and Norwegian Governments own our wind farms; the Dutch state runs our trains; and the Chinese Government, through PetroChina, own part of Grangemouth, the UK’s oldest oil refinery. No matter what the Minister had to say, this Bill looks like a paving Bill for nationalisation.

Given the sweeping powers within the Bill, will the Minister tell your Lordships’ House what additional powers the Government think they need to grant themselves full ownership of this industry? Do they actually need any more powers than are currently within the Bill? Given that this is one part of the UK’s remaining steel industry, how does Port Talbot fit into the picture?

Clause 7 speaks to compensation. There is government-backed finance in this. Can the Minister assure us that the measures taken today will not inadvertently increase the value of this business and therefore increase the necessary compensation that may be forthcoming from this Government? Finally, can the Minister tell your Lordships’ House what will happen to the other Jingye steel businesses in the United Kingdom?

We are still waiting for the Government’s so-called modern industrial strategy, but now, with steel in the balance and automotive on the edge, it is time for the Government to get it out there and start working with industry to deliver it. Within that strategy, the future of our steel industry must have a place. We are clear that steel should be classified as a national strategic asset and be backed by a comprehensive plan to ensure that more British steel is used in vital infrastructure projects, from defence to renewable energy. I say to the noble Lord, Lord Kerr, that just because we abandoned aluminium, why should we abandon steel?

Within the industrial and defence strategies, the Government need to determine what sort of steel we need, and need to produce locally, in order to deliver on our key strategic and security objectives. That requires a real analysis of whether electric arc manufacture can produce the sorts of steel that we need. Can the Minister assure your Lordships’ House that this analysis is a priority and will be published before any irrevocable steps are taken on the blast furnace?

That begs the question, of course, on environmental impact and energy. Whatever the future looks like, it must still be executed within a long-term carbon strategy. We do not support going back on our environmental objectives, but I suggest that the route to achieving them might be different from the one envisaged a while ago.

Secondly, it is clear that certain key industries are massively hampered by energy costs. It is a big issue that this Government handed to that Government: the price for energy has not materially increased since the Conservative Party relinquished control of government. That is on their watch, not this Government’s, but it is now on this Government’s watch to do something about it, and that is what we want to see happen.

As has been pointed out, we also need to understand how the UK will handle the Chinese dumping of steel on our industry. With the US market gone, how will the Government create a level competitive playing field? May I ask that the Trade Remedies Authority accelerate its review of Chinese markets?

Turning to another international issue, at this stage, the Government are not taking the enterprise into full public ownership, so presumably they will transfer money from a UK taxpayer to the plant ownership. Parts of Clause 2 give the necessary powers. This Government seek to uphold the international rule of law, and there are commitments on subsidies arising from the UK’s continued membership of the World Trade Organization, primarily set out in the agreement on subsidies and countervailing measures. Further commitments are contained in the General Agreement on Tariffs and Trade, in trade-related investment measures and the general agreement on trade and services. These are not new commitments, as your Lordships know; the UK was subject to WTO rules when it was a member state of the EU.

Furthermore, the UK-EU Trade and Cooperation Agreement contains a chapter on subsidies aimed at ensuring that subsidies do not have a detrimental effect on trade and investment between the UK and the EU. The requirements of the TCA are incorporated into the UK’s Subsidy Control Act, which has been in force since 4 January 2023. It is important for the Minister to set out how, under its proposed activity, it will meet these international obligations. I want the Government to succeed, but they should succeed within the rule of international law. More especially, at a time when we desperately need a closer trading relationship with the European Union, as set out by my noble friend, we want to know how this Bill and these actions will affect our relationship via the TCA obligations that we have made.

I had the pleasure of working on the Subsidy Control Bill, and it seems to be the core of this issue, yet somehow absent from any discussion of this Bill. Given the complexity of the Act, I do not propose to go into details, but Sections 19 and 20 are the key specific areas. The Act says that a

“subsidy … given during the preparation by the enterprise of a restructuring plan”

can be legal as long as it

“contributes to an objective of public interest”.

That is the point that the noble Lord, Lord Kerr, made, and it is what it seeks to achieve. However, further on is the condition that the public authority giving the subsidy needs to be

“satisfied that the restructuring plan … is credible … is based on realistic assumptions, and … is prepared with a view to ensuring the return to long-term viability of the enterprise within a reasonable time period”.

Do we have such a plan—or when will we get one? Perhaps the Minister can give a brief answer on the subsidy issue and set out in writing the detail of how we will meet our legal obligations to support the Scunthorpe plan.

A great deal of concern has been expressed about the open-ended nature of the Bill and the strength of the measures contained therein. We believe that there needs to be some end point in the Bill, and we are happy to discuss with His Majesty’s Government ways of alleviating our concerns on this—but these are genuine concerns felt right across this Chamber, and possibly at the other end.

This is a very difficult time for the people of Scunthorpe and everybody connected with this important plant. I close by reiterating comments we have heard right across the House: our thoughts go with this community—to the people who must be sick with worry about what is going to happen in their town. We on these Benches will do our utmost to support and maintain this industry so that it can move forward and they can have a future.

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[Baroness Jones of Whitchurch (Lab)]

My Lords, I thank all noble Lords not just for participating in this debate but for returning to this place in these exceptional circumstances. Before I respond to the comments that have been made, I reiterate the points made by the Prime Minister yesterday and by the Business Secretary in the other place today: the Government have always said from the outset of their negotiations with Jingye that we would keep every option on the table and act in the national interest to protect British jobs.

UK-forged steel built our railways, bridges and buildings. It is an integral part of our economic future, as it has been in our industrial past. That is why we need to pass this legislation today. I am therefore grateful to my noble friends Lord Reid, Lord Tunnicliffe, Lord West, Lady Drake, Lord Glasman and Lord Hanworth, and to my noble and learned friend Lord Falconer for reminding us how fundamental steel is to our infrastructure and our future economic growth plans. I also thank the noble Baroness, Lady Redfern, and my noble friend Lady Ramsey, who reminded us of the human cost of the potential closure of the Scunthorpe site. We reiterate our commitment to protecting jobs and communities impacted by that potential closure.

The noble Lords, Lord Hunt and Lord Moylan, complained about the urgency with which we have had to rush this legislation through. I think they do not appreciate the urgency of the situation we find ourselves in. Those blast furnaces were in danger of failing within days. That is why we are here today and why this action was so necessary. Like the noble Lord, Lord Fox, I am not inclined to take lessons from the party opposite, given their record over the previous 14 years. In her year and a half as the Business and Trade Secretary, Kemi Badenoch met UK steel companies on just three occasions. On the party opposite’s watch, UK steel production plummeted by 4 million metric tonnes between 2010 and 2023—an eye-watering fall of 42% in manufacturing. The UK went from the 17th largest steel producer in the world to the 26th largest over that period. The economic output of UK steel halved to £2.3 billion in that time. The noble Lord, Lord Hunt, heralded the use of coal and the opportunities that it would provide. I must remind him that it was his party that closed the coal mines and made us reliant on imported coal in the first place.

The noble Lord, Lord Moylan, asked if we would apologise. The Government will not apologise for acting in the national interest. As my right honourable friend said in the other place, this issue should have been resolved years ago. The situation we inherited across the board on assuming office is one in which most of our foundation industries found themselves in difficulty. Since 2010, UK crude steel production has almost halved. We know that rebuilding our steel industry after years of neglect will be a challenge, but it is one that this Government have grasped and it is why today, where others have shied, we have stepped up to take action.

I move on to some of the points that have been made. The noble Baroness, Lady Brinton, asked about the legal advice from the Attorney-General. It is the Government’s policy not to discuss advice provided to the Government.

The noble Baroness, Lady Coffey, asked about Teesside. Ultimately, British Steel has been responsible for commercial decisions regarding its location strategy. The Government were right to prioritise protecting as many jobs as possible during those negotiations, but it is not right to force job losses in Scunthorpe to benefit Teesside. However, of course we want to do the best we can by Teesside communities, so the Government are continuing to work with the Tees Valley Combined Authority and local partners on regional investment and growth opportunities.

The noble Lord, Lord Fox, asked about international law and our obligations. I can assure him that everything we do is in compliance with our international law obligations under the WTO, the GATT framework and international law more generally. I reassure him that we are entirely satisfied that these short-term powers are within the terms of our international law obligations.

The noble Lord, Lord Kerr, the noble Baroness, Lady Brinton, and others asked whether compensation would be paid. We need compensation provision within the Bill to preserve the investment climate and to comply with international standards, but the chances of compensation being recovered are slim because the powers are there to protect the company’s assets, not to damage them. Compensation would also have to be done via an SI, which would be subject to parliamentary scrutiny through the negative resolution.

The noble Baroness, Lady Brinton, also asked whether the Bill’s powers were overreaching for the Secretary of State. The powers are linked to what a relevant person could have done. Basically, they are to do anything that management is empowered to do, so they are there within those confines.

The noble Lord, Lord Hunt, the noble Baronesses, Lady Brinton and Lady Laing, and other noble Lords asked about the sunset clause. Because of the speed at which the legislation has been drafted and the uncertainty of the situation, it was neither necessary nor appropriate to set a timeline for these specific interventions. The current international situation is unpredictable, so a fixed sunset clause would not be workable or acceptable, as we might have to come back to Parliament and do it all again. We can, of course, revoke directions at any time in relation to a particular steel company once the need for intervention has passed. We would welcome working with the Business and Trade Select Committee to make sure we work with Members and keep them updated so that these powers are not in place any longer than is absolutely necessary. We understand the concern of the House about the use of these powers, and it is right that Parliament closely monitors this. We will be updating the House every four weeks on the use of these powers.

[Lord Fox (LD)]

My Lords, I thank the Minister for those words. What this House seeks, rather than an update, is the opportunity to invoke these powers in a way that they appear to be intended. They have been called emergency powers, and the Minister has called them short-term powers. Will the Government, within six months of this Bill coming into force, commit to having a substantive debate, in both Houses, to determine whether the Act will continue and to acting on any resolution of the House of Commons on the further continuation of those powers?

[Baroness Jones of Whitchurch (Lab)]

My Lords, I have been here on a number of occasions answering questions on the situation with steel. In the future, we will continue to engage as widely as we have done to make sure that Parliament is updated on these matters. As I have said, we will update the House every four sitting weeks on the use of these powers. I honestly think that, in these circumstances, that is sufficient.

Scunthorpe Steelworks

Lord Fox Excerpts

Monday 31st March 2025 Lords Chamber

[The Parliamentary Under-Secretary of State, Department for Business and Trade and Department for Science, Information and Technology (Baroness Jones of Whitchurch) (Lab)]

My Lords, as the Minister for Industry made clear on Thursday, this Government believe in the UK steel sector. Of course we take national security issues very seriously. We keep developments in all strategic industries, including steel, under constant review. For example, high-quality steel, including for defence programmes such as the Royal Navy’s new Dreadnought-class submarines, is already being made by UK EAF producers. British Steel is not a critical supplier for other defence programmes.

[Lord Fox (LD)]

My Lords, I am sure the Minister would join all your Lordships in expressing sympathy to the workers and communities not just in Scunthorpe but in Teesside who have had their steel industries whipped away from them. We have not heard much about the Government’s modern industrial strategy lately. We need one across the country and, as we have heard, we need steel to ensure we have the raw materials for manufacturing and our defence industries. If there is one, can the Minister set out for your Lordships what the Government’s steel industrial strategy is? What are the three key elements of that strategy?

[Baroness Jones of Whitchurch (Lab)]

My Lords, steelmaking in the UK is absolutely fundamental. We are in the process of developing a detailed steel strategy and we will come back to your Lordships’ House with further details. I make it clear that the Government will simply not allow the end of steelmaking in the UK, despite the situation we inherited, in which there has been a 50% decline in crude steel production over the past decade. We will continue to give steel, and steel in the UK, an absolute priority.

--- Later in debate ---

[Baroness Jones of Whitchurch (Lab)]

The noble Lord is right that this is a balance, but there are many good reasons why we need a steel industry in the UK, although obviously not at any price. We have made a significant offer of financial support to British Steel, and I hope that when those discussions continue the matter will be resolved.

[Lord Fox (LD)]

My Lords, I detected a dissonance in the answers there. At one point, the Minister said that we will always have a steel industry, but she just said “not at any price”. Those two things do not work together, so which is it? Is it we will have a steel industry whatever or there is a price that we will not pay for the steel industry?

[Baroness Jones of Whitchurch (Lab)]

As I say, we have made a very generous conditional offer of financial support to British Steel and negotiations are continuing. This is a live negotiation, and I cannot comment on commercially sensitive details at this stage, but we believe that our co-investment offer is fair and generous. We call on British Steel to accept that offer and the associated conditions. Obviously, there is a point at which those negotiations will not come to fruition, and we are making contingency plans, but we very much hope that we do not have to use them.

Employment Rights Bill: Productivity

Lord Fox Excerpts

Monday 31st March 2025 Lords Chamber

[Baroness Jones of Whitchurch (Lab)]

My Lords, of course we have taken into account the impact on small and medium-sized businesses, but having an entitlement to fair, flexible and secure working should not be available only to those who work for larger organisations. At the moment, 9 million employees—almost 40% of the whole private sector—work in small and micro businesses. Any exceptions to policy based on business size would create a two-tier labour market, with some workers facing fewer protections, leading to an uneven playing field between employers of different sizes and reducing incentives for small businesses to grow.

[Lord Fox (LD)]

My Lords—

[Lord Browne of Ladyton (Lab)]

My Lords—

--- Later in debate ---

[Baroness Jones of Whitchurch (Lab)]

I am grateful to my noble friend. He is citing one example. There are numerous examples of external support for our arguments. Academics at Warwick University, Oxford University, MIT and UCL all find a positive relationship between job satisfaction and productivity in their research—but, of course, I would welcome the opportunity to meet the academic to whom my noble friend referred.

[Lord Fox (LD)]

My Lords, clearly, we have many hours in front of us as we scrutinise this Bill. Much will depend on definitions and explanation, not least a proper definition of zero-hours contracts and the role of agencies in employment. But the glaring omission is the absence of any mention of freelancers. Does the Minister agree that freelancers form the mainstay of many important sectors, not least our creative industries? Will she undertake to ensure that the Bill focuses as much on freelancers as it does on other sorts of employees?

[Baroness Jones of Whitchurch (Lab)]

The noble Lord is right: we will have many happy hours debating this Bill in Committee and on Report in due course. On the issue of freelancers, he will know that this is only one piece of legislation. The make work pay programme includes a much more substantial piece of legislation. Where issues cannot be resolved fully in this legislation, they will come up in the wider Bills going forward.

Employment Rights Bill

Lord Fox Excerpts

2nd reading
Thursday 27th March 2025 Lords Chamber

[Lord Fox (LD)]

My Lords, rather than being the third party, I think I am the 59th party in this debate.

Somewhat repetitiously, I congratulate the noble Baronesses, Lady Berger, Lady Gray and Lady Cash, and the noble Lord, Lord Young, on their maiden speeches. Without being seen to pick one from the other, I was struck by the comments that the noble Baroness, Lady Gray, made about the benefits of having spent time running a pub. Straight after graduating, I became the manager of a busy bar in north London. I learned about people, and more importantly learned about employing people, because it was the first time I had started to employ people. It was a great lesson. You can learn a lot in places like that.

This has been an interesting debate. We have heard very disparate views. On the one hand, maybe the noble Lords, Lord Davies and Lord Hendy, put the pole in one place and, on the other hand, almost certainly the noble Lord, Lord Moynihan, placed the pole in another. Your Lordships’ task will be to work out where this Bill lands between those two poles. It is going to be a tough job in Committee.

This Bill undeniably sets out to meet a manifesto commitment that the Government very clearly articulated during the election. Unfortunately, one aspect of that commitment was to deliver it within 100 days. The nature of what we are discussing has suffered from the lack of rigour in preparation. That is clearly evidenced by the number of amendments that the Government themselves have had to bring—and also by the lack of detail and the number of consultations that are outstanding.

For that reason, those of us on these Benches will work closely on not just the intent but the detail of this Bill. An awful lot of detail is missing, and many of the real details are still out for consultation or are awaiting codes of conduct that will be set out in regulations that we have yet to see, so it is going to be quite a hard Committee.

However, before descending into that detail, we should reflect somewhat on the purpose of this legislation. We Liberal Democrats agree that there is absolutely a need to ensure that exploitative employment is dealt with. There is no doubt a need to do that, and we support that objective, but I hope that when this Bill leaves your Lordships’ House, it will be more widely equipped to help improve employer-employee relations and, yes, to deliver fair work, but also to create conditions for growth. If it is to do that then there is a long way to go to achieve it.

I have been a member of a trade union, and I have been part of executive management of businesses that have worked very constructively with trade unions, but that is not the only model for employer and employee. A central criticism I have of this Bill is that it seems to disregard the fact that many—I would suggest most—businesses maintain strong and beneficial relationships with their employees without the need for union involvement or intervention. As a starting point, this Bill seems to have an air of suspiciousness about the functioning relationships with which normal businesses go about their business. We have to go back and get away from the idea that one size fits all. There are a lot of different hybrids that work in business, and this legislation should facilitate them all equally. Further, there needs to be more recognition of employees as individuals rather than as members of unions. A fact of life is that, whatever the Government think, the vast majority of employees will not be in a union, at least in the private sector. We need to think about how that works.

The tone of this legislation is, perhaps unsurprisingly, very legalistic. An awful lot of lawyers have been involved in it. There will certainly be more employment tribunals if it passes as drafted. I emphasise that every time a case goes to a tribunal, both sides have already lost. We do not want to push things. In answer to the sedentary interjections from the noble Baroness, Lady Chakrabarti, the fact is that it will push things into a legal process; that is what I meant.

Given the uncharted nature of this legislation, we will rely on case law for years to come to define its boundaries. The noble Baroness, Lady Prosser, and others talked about equal rights legislation. Years and years of case law enshrined how that worked in the workplace. If the tribunals and the courts are so tied up, that case law will be very slow in coming. We have to be clear in our definitions so that we are not relying on those definitions for this Bill to function properly when it becomes an Act. We know that the tribunal system is already overloaded, with waits for rulings measured in years.

Also, ACAS will have an important role to play, not just on the policy side but with its mediation work. Will its funding be increased to reflect this extra burden? My guess is that the tribunals and ACAS will not be funded properly, which will cause administrative sclerosis, uncertainty and long waits for cases to be heard. How we are going to resource the Bill, if and when it becomes an Act, is something that needs to be taken into consideration.

I turn to some of the central points of the Bill. My first questions will be around the legal definitions of zero-hours contracts. A lot of work needs to be done to tighten definitions so that we know what we are talking about and what we seek to achieve. The addition of agency workers further complicates this point. There are fundamental decisions that we cannot wait for the legal process to deliver.

As this Bill passed through the Commons, the Liberal Democrats introduced a number of amendments that we will present to your Lordships’ House. For example, Daisy Cooper MP proposed a new clause to publish a review of the impact of Part 4 of the Bill on SMEs. Liberal Democrat MPs expressed concern about placing unreasonable burdens on SMEs. They duly called for clarity on aspects such as probation periods at an early stage due to the significant impact this will have on small businesses.

As the noble Lord, Lord Browne, noted, this is a complicated Bill. Should any small business person have had time while running his or her firm to listen to the Minister’s introduction—very able as it was—its complexity would certainly have alarmed them. It is daunting legislation for all businesses, but particularly smaller businesses. I fear that the retail, hospitality and leisure sectors stand to face some of the biggest challenges that the Bill could launch.

I caution against conflating the contents of this Bill with productivity and growth by citing international examples. There is a difference between correlation and causation, and we perhaps should not go too big on that. We should use a different measure—what is right to do, rather than the supposition that it may or may not deliver growth.

As we heard from the triumvirate opposite—the noble Lord, Lord Freyburg, the noble Viscount, Lord Colville, and the noble Earl, Lord Clancarty—there needs to be a proper understanding of the role of freelancers and the self-employed within the workplace. Where do they sit within this Bill, and what should or could their contractual rights be?

It is also clear that the Bill needs to focus more on the future of employment, and here we should look at closer alignment with EU positions—for example, on AI involvement and algorithm-directed employment. These have been discussed in the past but they are not included in the Bill. I hope that the House will debate this, and that the Minister will be forthcoming on these future issues.

Then there is the fair work agency and how it will operate. There have been alarming reports in the press, which may or may not be true, but it is clear that we need to flesh out how this agency will work. How will it supplant the work of the Treasury and, possibly, the Gangmasters and Labour Abuse Authority? Will it have access to the same data the Treasury has, bearing in mind that this is confidential tax data? Before we reach Report, the Government should publish full proposals for this agency. We cannot approve it sight unseen. Furthermore, as we have heard from a number of noble Lords, the preponderance of delegated legislation will have to be addressed either by your Lordships or, I hope, by the Government in advance of that process.

The Spring Statement saw the biggest reduction of assistance to working carers for a decade. As my noble friend Lord Palmer set out, we will seek to strengthen provisions on carer’s leave. We will also address parental issues, such as the absence of provisions on miscarriage bereavement leave. We will propose increasing the length of paternity leave and making it more flexible, which I hope will please and be supported by the noble Baroness, Lady Penn.

As my noble friend Lady Kramer set out, we will table amendments that seek to act on whistleblowers and on the misuse of non-disclosure agreements. I share the analysis of the noble Baroness, Lady O’Grady, and others on the need to protect workers from harassment.

To conclude, I am anxious that the Minister does not dismiss the negative words that she has heard today as being purely political chipping. There are genuine practical problems that we need to address in your Lordships’ House, and I hope we can take forward that practical approach as we go into Committee. Liberal Democrats believe that the lack of detail in the Bill does not facilitate certainty and stability for businesses or workers. That is what we need for growth: certainty and stability. There are huge holes in the available data and detail supporting this important Bill. Much of that detail is floating in the many consultations or as yet unpublished codes. We need to have advanced sight of the important levels of detail that will flesh out the skeleton of this Bill.

Like many, I fear the overall effect that this Bill will, or could, have on small and medium-sized businesses, particularly through the introduction of much complexity and the threat of cases being taken to many more tribunals. It is friction, and these businesses do not need yet more friction in what is already a very difficult trading environment. In the main, this Bill takes a one-size-fits-all approach to addressing genuine problems in the workplace, and it does not look far enough forward on future employee issues. That said, we look forward to discussing this issue in Committee.

US Steel and Aluminium Tariffs

Lord Fox Excerpts

Wednesday 12th March 2025 Lords Chamber

[Baroness Jones of Whitchurch (Lab)]

My Lords, as the Prime Minister has made clear, when it comes to the national interest, he rejects having to make any false choice between allies. We are committed to continuing our work with both the US and the EU to remove barriers to trade and help UK businesses grow. Our number one priority will be the growth of the UK economy and free and open trade with our most economically important partners. We will only ever sign trade agreements which align with the UK’s national interests.

[Lord Fox (LD)]

My Lords, the noble Lord, Lord Callanan, speaking to the last Question, noted that the Trump Administration had been completely outrageous to Canada. By extension, it must therefore have been completely outrageous to the European Union, so it is interesting to hear the opposite being argued by the noble Lord, Lord Sharpe. Does the Minister agree that now is the time to work with our allies? The noble Baroness, Lady Chapman, said that Canada is our closest ally. The Prime Minister has said that we need to reset our relationship with the European Union. Why, then, have we taken a different approach to those two closest trading allies?

[Baroness Jones of Whitchurch (Lab)]

My Lords, as the Prime Minister has said, this is a time for a cool-headed approach on the issue of trade tariffs. The UK and the US have a strong economic relationship that is fair, balanced and reciprocal. The tariffs on steel, aluminium and derivatives being proposed by the Trump Administration are global; they are not targeted at the UK. In the meantime, we have been having regular, detailed conversations with the US Administration and have repeatedly and emphatically made the case for the UK to be exempt from proposed tariffs—most recently with the Secretary of State speaking to US Commerce Secretary Howard Lutnick on Sunday and US Trade Representative Jamieson Greer on Tuesday. We have made that point over and over again. This is a time for a cool-headed approach to any possible tariffs, and we will take every action we need to in order to defend the UK’s national interest.

Plant Oxford Site

Lord Fox Excerpts

Tuesday 25th February 2025 Lords Chamber

[The Parliamentary Under-Secretary of State, Department for Business and Trade and Department for Science, Information and Technology (Baroness Jones of Whitchurch) (Lab)]

I thank the noble Lord for his kind comments and look forward to working with him in our new roles in the future.

The precise timeline for the launch of Oxford’s Mini new electric vehicle models is a commercial matter for the company. It is not unusual for a manufacturer in the automotive industry to adjust its plans for future products, including production dates. However, the reasons given by BMW are the “multiple uncertainties” that it is facing rather than any specific issue. Its concerns are about the timings and not about the willingness to invest. We are, of course, in regular dialogue with BMW to understand its future investment timelines and to discuss its plans for the UK plants and those employed there.

[Lord Fox (LD)]

My Lords, perhaps it would help if we identified some of the headwinds that our automotive industry is facing. To meet the mandate and try to sell enough EVs, last year our top motor brands discounted a total of £4.5 million and still they will not reach the mandate and will face penalties. On top of that, energy costs are up to 65% higher than the costs faced in the rest of Europe and of course there are higher business rate multiples and employer NIC costs coming up. Those are the challenges that our businesses face. Will the Minister at least acknowledge that there is a challenge and undertake to find ways of better meeting it, perhaps by helping consumers to buy more EVs and looking at energy costs?

[Baroness Jones of Whitchurch (Lab)]

My Lords, of course we understand the challenges faced by the sector. The Government have been working closely with stakeholders across the automotive industry and beyond to support demand for zero-emission electric vehicles. Defra has been consulting on this issue and recently closed a consultation to understand stakeholders’ views on the transition to zero-emission vehicles. However, this is not just a UK issue; a number of countries, particularly in Europe, have similar zero-emission targets for cars. It is a challenge that all automotive companies are facing globally. Nevertheless, we are committed to making the UK one of the best places in the world for automotive investment. In the Budget, we committed over £2 billion of capital and research funding for zero-emission vehicle manufacturing and its supply chains. We continue to work with this very important growth sector; it is one of the arms of our industrial strategy, so we see a strong future for the automotive industry. Nevertheless, the noble Lord has made an important point.

Stellantis Luton

Lord Fox Excerpts

Thursday 28th November 2024 Lords Chamber

[Lord Fox (LD)]

My Lords, I feel that the onus is on me to concentrate on the Statement at hand. This is undeniably a sad announcement for a business that stretches back to the start of the previous century. It is a sad day for Luton, which has a proud tradition in vehicle manufacturing. Most of all, it is a sad day for the 1,000-plus men and women who are potentially losing their jobs.

There are people in your Lordships’ House who know Vauxhall better than I do, but although I no longer have a pecuniary interest in the automotive industry, my past work in that sector led me to value the skills and ingenuity of the people around whom I worked. My first question is this. Many businesses in other sectors are crying out for the skills possessed by the people being laid off, but in many cases those jobs are not in Luton. How do the Government plan to help retain those skills and channel those people, who are skilled workers, into well-remunerated, vital jobs? My second question concerns the town of Luton itself. What is being done to support the local community that is being denied an important driver of its local prosperity and economy? The Government need to work with Vauxhall and others to mitigate this, as it will be a major shock for the area.

This sad announcement is at the leading edge of a wider set of issues that face UK vehicle manufacturers and the Government’s plans to electrify personal transport in the UK, their so-called ZEV mandate. There are important questions regarding this ZEV mandate. As we know, 22% of cars sold this year have to be electric vehicles, EVs, rising to 28% next year. If a business fails to meet that target, either it pays a £15,000 fine on each internal combustion car it sells or it buys credits. This is handing cash to usually foreign competitors, such as Mr Musk’s Tesla. This system was put in place by the previous Government. Is it a sensible industrial strategy?

Successive Governments have taken a largely supply-side approach to this, and initially it had some success. Does the Minister agree that unless the Government address the demand side, UK manufacturers will not achieve their mandate targets? Added to that, the previous Government sent out mixed messages that caused many people who might have bought their first EV to opt for one more internal combustion engine. Demand needs to be stimulated. Infrastructure remains patchy, pavement charging is expensive for users—inhibiting the spread of EVs to people who do not have a drive on which to charge their vehicle—and sensible subsidies are being phased out. Can the Minister confirm that her department is now discussing incentives—for example, cutting VAT on EVs—with the Treasury?

Lib Dems have repeatedly called for it to be made easier and cheaper to charge vehicles by rolling out far more residential on-street chargers, ultra-fast chargers at service stations and the electricity grid infrastructure needed to support them. Additionally, VAT on public charging should be cut to 5% and all charging points should be accessible by a bank card, rather than the collection of different smart cards required.

Meanwhile, as demand stalls, the market for UK firms is getting harder. UK car makers are already competing with Chinese EVs that benefit from inbuilt domestic subsidies. In the EU and the US, these Chinese businesses are likely to face high tariffs in future. If both these huge potential markets erect such barriers, the likelihood is that Chinese EVs will flood into their remaining markets. Can the Minister set out the Government’s position on possible UK tariffs on Chinese EVs?

Yesterday the Secretary of State referred to the £2 billion for research and capital funding that was announced in the Budget. Can the Minister tell us the split between R&D and capital for that money? What is the phasing of that money—for example, how much will the industry see this financial year?

In summary, for the UK car industry basic costs have risen, energy costs have rocketed and labour costs will rise following the Budget. In the meantime, UK manufacturers are trying to sell more EVs than UK consumers want to buy, with a backdrop of cheap, subsidised imports. Does the Minister recognise that these are existential issues? When will the industry get to know what the Government’s response to these issues will be?

[The Parliamentary Under-Secretary of State, Department for Business and Trade and Department for Science, Information and Technology (Baroness Jones of Whitchurch) (Lab)]

My Lords, I thank noble Lords for their responses to the Secretary of State’s Statement in the other place. The news on Tuesday that Stellantis was commencing a consultation with staff on the future of the plant at Luton will have been very difficult to hear for the hard-working staff, their families and the wider Luton community. We have asked the company to share the details of its plans with us so that we can put in place the right support across government to help them through this process. Luton has a proud history. While this is disappointing news, we are confident that the town has a bright future ahead. We will work closely with Stellantis, trade unions, Luton Borough Council and other partners to look at the impact of this decision.

I heard the points made by the noble Lord, Lord Fox, about the zero-emission vehicle mandate and how it links to this decision. Ministers met Stellantis within days of coming into office to discuss the pressures it was facing in its business, including concerns on the zero EV mandate, but that was not the only concern it raised. Noble Lords will know that this is a complicated area. The automotive industry is operating under a lot of different pressures, and this is just one of them that we are seeking to address.

The noble Earl, Lord Effingham, asked about consultation. The Statement made clear that the Secretary of State has been in constant discussion with Stellantis and others in the automotive industry to address their concerns. The Secretary of State for Business and Trade and the Secretary of State for Transport are listening closely to the concerns of the industry and the wider sector about the transition to electric vehicles. This included the round table earlier this month to hear directly from major automotive companies, the Society of Motor Manufacturers and Traders and the charging sector. In response, we will shortly be fast-tracking a consultation on our manifesto commitment to end the sale of new pure petrol and diesel cars by 2030, but the question here is the transition rather than the endpoint. I think we are clear about what we want to achieve by 2030. We will use this consultation to engage with industry on the previous Government’s zero EV transition mandate and the flexibilities within it, and we will welcome the industry’s feedback as we move forward.

We want to do everything we can, together with industry, to secure further investment in the British automotive sector now and over the longer term. That is why in the Budget the Chancellor committed £2 billion to research and development and capital funding to support the zero-emission vehicle manufacturing sector and the supply chain. The noble Lord, Lord Fox, asked about this support. The Government are already backing the wider industry with more than £300 million to drive uptake of zero-emission vehicles, and we have also committed long-term funding of more than £2 billion of capital and R&D funding to 2030 for zero-emission vehicle manufacturing and its supply chain as part of a comprehensive offer to attract strategic investment and deliver real growth. There is a real opportunity for the UK from the transition to zero-emission vehicles, and we welcome the commitment Stellantis made to expand its production of electric vehicles at its other plant in Ellesmere Port by adding a second van model.

This is a complicated issue. An expansion of electric vehicle production is going ahead. I make clear that, at Luton, only diesel vans are being produced, so, if anything, production is switching to electric vehicles and not the other way around. Our automotive sector is at the heart of UK manufacturing and the global and British brands that make vehicles here are central to unlocking further growth and investment. Our industrial strategy will address these issues and ensure that further growth and investment is absolutely at the heart of what we intend to do. As the Secretary of State said yesterday, the Government are clear that decarbonisation must not mean deindustrialisation, and that winning the race to net zero and having a world-leading automotive sector must go hand in hand.

The noble Earl, Lord Effingham, asked about the Budget. I do not need to take any lessons from the previous Government, since they left a £22 billion black hole that we inherited. I am sorry to remind them—I know they would rather we forgot that—but let us be honest: that is what we have inherited and have been struggling with ever since. The Budget dealt with that black hole in the Government’s finances, and—as the noble Earl mentioned—over this Parliament the Government will transform business rates into a fairer system that protects the high street, supports investment and is fit for the 21st century. The Government are permanently lowering business rates for retail, hospitality and leisure properties from 2026-27—so we are addressing business rates.

The noble Earl mentioned the employment Bill. I am proud that we are bringing modern employment practices to this country—the previous Government promised this, but it was never delivered. The noble Lord, Lord Fox, asked about imports, and several noble Lords mentioned Chinese EVs. Again, this is a complicated area, but we are closely analysing how imports of Chinese EVs will impact the UK’s economy and industry. It is worth stressing that the UK’s economy and industry differ from other countries in both ownership and markets. We export 80% of what we make, compared to, for example, the US and EU, where a greater proportion of production is sold domestically. So we need to adapt our approach to what is appropriate for our situation here in the UK. When we need to act, we will do so, but any action taken on Chinese EVs has to be the right one for the UK industry.

We are also looking at unfair trading practices on an international basis by supporting global initiatives at the WTO and G7, and domestically through our industry-led trade remedy systems. Here, we already apply 44 trade remedy measures, 28% of which are on China. I hope I have addressed the main points that noble Lords have raised today, and I look forward to further questions.