Conduct of Employment Agencies and Employment Businesses (Amendment) Regulations 2022

Lord Paddick Excerpts

Monday 18th July 2022 Lords Chamber

[Lord Hendy (Lab)]

My Lords, I support the amendment moved by my noble friend Lord Collins. Wages are rising at 4% per annum and prices are increasing at 11% per annum. It is a sad thing that the Government’s response is to take yet further measures to stop workers exercising the only leverage they have to maintain or even improve their standard of living. The Minister frankly admitted this evening that the purpose of the statutory instrument in relation to damages was to deter unions from striking, and that would be achieved by increasing the cap on damages by 400%. The point that I wish to raise with the Minister is that this further regulation of trade union freedom may well put the United Kingdom in breach of its international legal obligations, and it is to that that I will restrict my remarks.

My noble friend Lord Collins mentioned Article 3 of Convention 87 of the ILO, which is the most fundamental of all the ILO conventions, the international standards of labour. Article 3 guarantees that unions and employers’ associations can organise their activities

“free from any interference which would restrict this right or impede the lawful exercise thereof.”

Among the activities that unions must be free to organise is, of course, industrial action. Consequently, the relevant supervisory committee of the ILO—the quasi-judicial Committee of Experts on the Application of Conventions and Recommendations—has said:

“Provisions allowing employers to dismiss strikers or replace them temporarily or for an indeterminate period are a serious impediment to the exercise of the right to strike.”


My noble friend Lord Collins mentioned a decision of the Committee on Freedom of Association to similar effect. The authoritative interpretation of conventions by these committees is recognised not only by the European Court of Human Rights and other courts, such as the Supreme Court of Canada, but by our domestic courts. Those committees have held for some time that, among other non-conformities, British law currently does not comply with the requirements of Convention 87, Article 3 because workers taking industrial action are inadequately protected.

I hope that the Minister is not going to say that he disagrees with the rulings of those two ILO committees. They are the supervisory bodies of Convention 87, and it would sound like the first-year law student who writes an essay saying that he disagrees with a judgment of the Supreme Court. I am sure the Minister will not be saying anything like that.

I wish to make an additional point before I sit down. Breach of an ILO convention is bad enough, particularly one ratified by and binding on the United Kingdom, of which the United Kingdom was the very first signatory back in 1948. Secondly, the EU-UK Trade and Cooperation Agreement of 2021 involved the Government undertaking post Brexit to comply with various international treaties by which they were already bound. The effect is that non-compliance with these treaties is not only a breach of them but is unlawful on the additional ground that it is a breach of the Trade and Cooperation Agreement. Paragraph 2 of Article 399 states:

“each Party commits to respecting, promoting and effectively implementing the internationally recognised core labour standards, as defined in the fundamental ILO Conventions”.

Paragraph 5 states:

“Each Party commits to implementing all the ILO Conventions that the United Kingdom and the Member States have respectively ratified and the different provisions of the European Social Charter that, as members of the Council of Europe, the Member States and the United Kingdom have respectively accepted.”


The UK has the obligation not only to respect and promote Convention 87, but also to effectively implement it. Those obligations surely prevent the UK adding an additional obstacle to the effective exercise of the right to strike by allowing agency strike breakers.

[Lord Paddick (LD)]

My Lords, we on these Benches are very concerned about the impact of strikes such as those planned to close down the rail network, preventing hard-working people, including emergency workers already suffering under the cost-of-living crisis, getting to work, but we do not believe these regulations are the answer.

This first statutory instrument appears to be a sham. It is another pretence at doing something instead of what the Government should actually be doing, which is enabling, empowering and facilitating employers to negotiate effectively with their employees and the trade unions that represent them to prevent the need for strikes in the first place. If the Government were taking effective action to mitigate the devastating further increases in the cost of gas and electricity this winter and the associated increases in the costs of essentials such as food and clothing, there would be less of a demand for large wage increases in the first place.

The report of the Secondary Legislation Scrutiny Committee not only casts doubt on the practical effectiveness of the change brought about by this SI, but also points out the weakness of the Government’s own impact assessment, as the noble Lord, Lord Balfe, has said.

Using agency staff to backfill those on strike is likely to prolong disputes—that is, even if employers can get agency workers. As the Trades Union Congress and the Recruitment and Employment Confederation have said, with 1.3 million vacancies in the UK, the number of agency staff available is declining rapidly, the opportunities for them to be employed are increasing and they will choose employment that does not involve having to cross picket lines.

According to UNISON, research shows that, with the best will in the world, agency staff less familiar with the workplace and working practices are more likely to make mistakes, have or cause accidents and cause harm to themselves and others, mainly because of a lack of training, lack of access to protective equipment and lack of supervision. If the Government think there are sufficient agency train drivers, signallers and trained station staff, who, for example, have to assist disabled passengers on and off trains, they are deluding themselves.

Even the British Medical Association is opposed to these regulations. The Government are required to consult before making changes, and yet, as other noble Lords have said, the last consultation was seven years ago, when, as a result, similar proposals were abandoned. Surely, a seven-year-old consultation is not sufficient, as the BMA suggests, and as the noble Lord, Lord Collins of Highbury, has said.

Even in that consultation seven years ago, the majority of businesses supplying agency staff said that the changes would have a negative effect. Some 49% of the respondents said it would have a negative impact on agency workers. On the impact on employers, 40% said it would have a negative impact. Only 24% said it would have a positive impact, as it would worsen the relationship between employers and employees if they backfilled with agency workers.

Despite all of that—despite the majority on all sides saying that this is a bad idea—the Explanatory Memorandum states:

“The Government has carefully considered all these points and remains of the view that removing regulation 7 is the right course of action.”


If that is not the definition of pig-headedness, I do not know what is.

As the noble Lord, Lord Hendy, has set out in detail, doubt has also been cast on whether the change is compatible with international law, for which this Government have scant regard—be it genuine asylum seekers seeking sanctuary in the UK, or their proposed unilateral action on the Northern Ireland protocol. This Government are rapidly moving the UK towards being seen by others as a rogue state.

This statutory instrument is a poor and ineffective substitute for what the Government should be doing: being more effective in tackling the cost-of-living crisis and getting employees and employers around the table to prevent strike action in the first place.

With regard to the increase in the limit for damages for illegal strikes, rarely if ever is industrial action brought by trade unions if it is illegal. Other than intimidating trade unionists, we question the timing of such changes.

We support the amendment in the name of the noble Lord, Lord Collins of Highbury.

Insolvency (Moratorium) (Special Administration for Energy Licensees) Regulations 2020

Lord Paddick Excerpts

Friday 9th October 2020 Lords Chamber

[Lord Paddick (LD)]

My Lords, I am guessing that the difference between these regulations with their sparsity of speakers and the previous regulations where there were a lot of speakers is that many people know about the hospitality sector but not many know about administration and insolvency moratoriums as they apply to energy companies. I include myself in that, but let us give it a go.

As I understand it, there are already regulations in place whereby the Secretary of State or Ofgem can ensure continuity of supply of gas and electricity to consumers in the event of insolvency of energy companies. In the event of a large supplier of gas or electricity, electricity and gas transmission companies or network distribution companies becoming insolvent, arrangements can be put in place to ensure that customers continue to be supplied with gas or electricity as cost-effectively as possible until the company in difficulty is either rescued or sold or its customers are transferred to other suppliers.

That is done by the Secretary of State, or Ofgem with the Secretary of State’s consent, applying to the court for an energy administration order, a smart meter communication licensee administration order or an energy supply company administration order. However, as the Minister has said, companies that are in financial distress, including energy companies, can apply for the protection of a moratorium under Part A1 of the Insolvency Act 1986, which was inserted into the 1986 Act by the Corporate Insolvency and Governance Act 2020. Without these regulations, Ofgem or the Secretary of State would be unable to intervene to ensure security of supply without the permission of the court because of the protections provided by the moratorium, which could result in an interruption of supply.

The Government claim that the urgency of passing this legislation is twofold: first, because energy companies face significantly increased financial pressures due to the coronavirus pandemic; and secondly, because these pressures will become more acute in the autumn and winter of 2020, for example, as electricity suppliers are liable for significant payments that are due under the renewables obligation scheme by the end of October. This scheme requires a certain level of electricity to be generated from renewables or a payment in lieu if that threshold is not reached.

The Minister will correct me if I am wrong on any of this but if I have understood everything correctly, then several questions arise. Why was the potential difficulty of energy companies applying for a moratorium under Part A1 of the Insolvency Act 1986, as inserted by the Corporate Insolvency and Governance Act 2020, not foreseen when the 2020 Act was drafted? The Minister said that the Government moved quickly to bring in this legislation; one has to wonder whether it was brought in too quickly.

How will the Secretary of State ensure that the provisions in this statutory instrument will not discourage energy companies from looking into restructuring and rescue options before filing for insolvency? What are the specific causes of the increased financial pressures on energy companies as a result of the coronavirus pandemic? The Minister says it is unlikely that these regulations will be needed, yet the accompanying advice from his department to noble Lords says that they are necessary and urgent.

What scope is there for the Government to defer payments due under the renewables obligation scheme for energy companies in financial distress to prevent them having to apply for insolvency or a moratorium on insolvency? What scope is there for the Government to provide other forms of financial assistance that have been given to support other sectors during the coronavirus pandemic, as an alternative to these regulations?

In normal times, such interventions are to enable another supplier to be put in place to provide continuity of supply. Although the Minister, on the one hand, paints a rosy picture about these regulations not being likely to be needed, on the other the advice is that they are needed urgently. To what extent is the whole energy industry facing difficulty, such that it requires this urgent action by the Government? Can the Minister assure consumers that the Government will take whatever steps are necessary to ensure continuity of supply, even outside the provisions of these regulations? I look forward to hearing the Minister’s reply.