Small Business, Enterprise and Employment Bill

Lord Storey Excerpts

Monday 26th January 2015 Grand Committee

[Lord Whitty (Lab)]

My Lords, I, too, support this amendment and I take issue with the noble Lord, Lord Stoneham. The worst thing for a small business that is obeying the law is that there is another business down the road that is not. There has been quite some fragmentation at the bottom end of the labour market since 1998 and we know that the way people are employed—or quasi-employed—is now much more dubious in terms of what they are entitled to and how you can check on it. Where people are not being paid the minimum wage for the hours that they work, it is important that the authorities can both check on it and enforce it. I fear that, at the moment, there are not many resources for doing either. Strictly speaking, the wages inspectorate is part of this as well as HMRC, but this is not top of its priorities and the number of prosecutions in this area has been very limited. I am not denying that there have been noises from BIS and from the noble Baroness’s fellow Ministers on this front, and I welcome that. However, the reality is that are a lot of people who are either on zero-hours contracts, which we will debate in moment, or on various other quasi- terms which they cannot argue with the employer and whose money is below the rate they should be getting.

The Agricultural Wages Board used to have a particular inspectorate—it was not even five people at last knockings —but when the board was abolished last year we received assurances that that resource would be transferred into HMRC. I understand that no such increase has actually occurred, either in the wages inspectorate or HMRC. Regarding HMRC, I would be reluctant to agree with Amendment 68ZR that enforcement should go entirely to local authorities. HMRC often has a way in because it sees the books, so I would keep a role for it. That could be followed through in rather the same way as local authorities follow through environmental health legislation by being given more of a role in that respect. Local authorities would also need the resources to be effective in this area.

We need to recognise that the present situation is not adequate. The enforcement resources that would be subject to the annual report are not adequate either. Having a maximum penalty of £20,000 is also not a deterrent for a lot of employers who operate on the murkier side of the labour market. It is not always small companies that are doing this; it is often large companies, or their sub-contractors, or labour-only suppliers who are paying below this rate. We therefore need a step change. Amendment 68ZN would go a considerable way to providing a degree of deterrence. Amendment 68ZQ would mean that Parliament would at least know what the level of resources in this area ought to be and actually is. On Amendment 68ZR, I would hope that local authorities would have some role, but HMRC and its resources are also an important element.

[Lord Storey (LD)]

My Lords, when the Minister replies, perhaps she could clarify whether it is £20,000 per person or £20,000 for the company. I do not think there is any difference between us. The noble Lord, Lord Stoneham, is right to say that the most effective way of ensuring compliance is by actually prosecuting. So far, the number of prosecutions is very small and is not even steadily rising. Now that HMRC has the information on tax avoidance, we have the power and the tools to make sure that businesses comply. I hope that the Minister will say something in her reply about how we ensure that we use the full force of HMRC and that action is taken against the very few businesses that do not comply.

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[Lord Storey]

I very much thank the noble Baroness for tabling this important amendment. In doing so, she brings with her a wealth of experience in this area. We know of Members in both the House of Lords and the other place who employ interns—I was conscious of that when I first came to Parliament—but you can do that only if your parents can look after you financially. If you are living on a council estate in Sheffield, Liverpool or Glasgow—let us keep the full nations in and also say Swansea—your chance of doing an internship in Westminster would be non-existent. We also know that if you do an internship in Westminster, it is an opportunity for real career advancement.

My view is that all internships should be open and accessible, and freely advertised. They should be paid after an agreed period, at minimum wage, and be for a set period so that we level the playing field and it will not be just the rich and wealthy who can afford to provide those opportunities for their children. Everybody could have that opportunity as well. But there are real difficulties in this area; it is not quite as simple as we think. I thought, “Great. Interns should be paid”, et cetera, but then we have to think carefully through the issues. That is why this probing amendment is so important.

What is the position of work experience? As a former employer, I remember that local schools would send pupils for two weeks’ work experience. What about volunteering and genuine volunteers? A close friend of mine volunteers every Saturday to work in the local Oxfam charity shop. How does that work out? Some young people generally want to volunteer—with no ambition to follow a career in that area but because they have a social conscience. The other issue is: how does that fit in with sandwich courses at universities, where people will go from university as an intern for a full year? Those things need to be carefully considered because of the interrelationship between them, and because of the issues of taxation and finance involved.

My only concern about the amendment is that it calls for a report in 12 months’ time; I think that it needs to be sooner, rather than later. When the Minister replies, I hope that we will hear some supportive sounds about the probing amendment.

Finally, I was quite surprised that when I tabled a Written Question asking how many interns there were in Westminster, the Government were unable to provide that information, which seemed to me bizarre.

[Lord Mitchell (Lab)]

My Lords, I support my noble friend Lady Donaghy’s probing amendment. I have to make a declaration of interests. I am chairman of a company called Instant Impact. The principal business of that company is the recruitment of graduates from universities, which is obviously close to what we are discussing today.

“The condition of your birth does not determine the outcome of your life”.

Those are not my words, but those of an unlikely source, US Republican Congressman Paul Ryan, a staunch right-winger and not one we would expect to support the nanny state. Who among us could disagree with that?

Of course, in the Labour Party, we believe passionately that everyone should have an equal chance to succeed, no matter what his or her background may be, but the Conservative and Liberal Democrat parties are wedded to the same mantra: whatever our birth may be, each of us should have the same opportunity.

When most of us were young and seeking our first jobs, it really did not matter whether we had worked as interns. Indeed, the term barely existed. Sadly, all that mattered was where the candidate went to school and, more importantly, where the candidate went to university. In my case, Ealing Technical College probably did not stack up too highly. A good degree was a help, but not a necessity. A gentleman’s third-class honours was still acceptable with a wink and a rueful smile. That was true then, but no longer.

Today, the CV has become a rite of passage. It must be fine-tuned and honed, with not so much the right school, but certainly the right university and, without question, the right level of honours degree. The soft factors also count: sporting activity, cultural pursuits and charities supported. In a highly competitive world, whatever makes you stand out and interesting will help you to land the job you want. These days, young people need to include job experience on their CVs. They need to show that they have worked for a series of organisations and that they have become well rounded individuals. One of the ways that they do that is by becoming interns.

To the wealthy and well connected, getting their sons and daughters into suitable internships is relatively easy. I bet that many of us in the Room today have address books that other people would kill for. We have access to everyone who counts and, even if we do not, we have no problem in working the network to make sure that we get our children or grandchildren through the door. Some of us are able to fund our children if they do not get paid for their internship. After all, we can argue that it is the final part of their education and goes with the territory.

As a result, whole swathes of our economy are riddled with unpaid interns. The media, fashion, advertising and the new social media companies recruit unpaid interns at will, simply because they can. As has been said, how many Members of Parliament or Peers in our own Palace of Westminster have unpaid interns working in their offices or their constituencies? I do not know the answer but I would bet that the number is much higher than most of us suspect.

What happens if your parents do not have the contacts or are simply unable to fund you while you are working for nothing? I hope that the Government accept my noble friend’s amendment because we need more information about whether people are being exploited. If they are, I hope that the Minister will commit to looking at a four-week limit, as suggested by Intern Aware. I should like to hear the Minister’s views on this. I hope that she does not suggest—as the noble Lord, Lord Popat, did, when the noble Lord, Lord Storey, asked a Question in the House a few weeks ago—that we should refer to the Government’s Graduate Talent Pool for an answer. I have never heard of it and nor has anyone else I know. It really does not feature on the intern recruitment side. I also ask her not to suggest that HMRC has the powers to intervene and that it can hunt down any offenders. It is stretched to capacity, and anyhow it has other fish to fry.

There are many organisations that support the four-week limit. Axa, a major insurance company, says that a four-week limit to unpaid internships will ensure a fair opportunity for everyone. Ernst & Young says that young people deserve to be paid for the work that they do on internships, and if they do not, it is reprehensible. The wonderful Charlie Mullins, the founder of Pimlico Plumbers, a small business—which is not so small these days—says that it is completely reprehensible for companies to expect interns to work without pay. The ACCA has asked for an end to unpaid internships. RIBA expels members who use unpaid interns. UK Music says that interns should always be paid at least the national minimum wage. Lastly, the Times said in a recent editorial that the,

“abolition of unpaid internships is worthy and desirable”.

Under current national minimum wage law, an intern is entitled to pay only if they are working under a contract; of course, for a contract to exist it needs consideration. That means that if an intern receives nothing except expenses from their employer, the national minimum wage will not apply. The worst employers are exploiting this loophole and, under the law as it currently stands, there is little that can be done. The dice are loaded against those who cannot afford to take unpaid internships. The solution is not to discourage rich people from helping their children but to do a lot more to help clever kids who do not have wealthy parents.