Small Business, Enterprise and Employment Bill

Debate between Lord Watson of Invergowrie and Baroness Donaghy

Monday 26th January 2015 Grand Committee

[Baroness Donaghy]

My Lords, Amendment 68ZT asks the Government to publish a report on the whole issue of internships. Clearly, it is a probing amendment, and I make it clear that I am not against internships. Paid internships are not only fair but can be argued to be good for business, as they allow all to compete on an equal footing for valuable experience. Across all sectors, those firms offering paid experience get more applications from a broader range of candidates. By offering the minimum wage, or even the London living wage, firms are able to secure the most able workers.

However, where internships are informal and unpaid, they are likely to be unstructured and unhelpful for the intern and for the company. The proliferation of unpaid internships is now a barrier to social mobility and is blocking routes into higher-paid jobs for young people from low-income backgrounds. Although information on internships varies, the Chartered Institute of Personnel and Development, of which I am a member, estimates that 21% of businesses offering internships do not pay their interns. According to the Sutton Trust, it is estimated that across the UK 22,000 interns are working unpaid at any one time. Data from the trust show that 31% of recent graduate interns are working for no pay. In the 2012 report on fair access to professions, the Social Mobility and Child Poverty Commission noted that unpaid internships are concentrated particularly in the creative industries, the media, and financial and professional services.

The Sutton Trust report continues by stating that an unpaid internship can cost an individual £926 a month in London, or £804 a year in Manchester, on a six-month work placement. The cost of working for nothing rules out all but those from better-off families and discriminates against the majority of young people, who cannot afford to work for free. The trust goes on to say:

“All internships longer than one month should be paid at least the National Minimum of £6.50 per hour, and preferably the National Living Wage of £7.85 (or London Living Wage—£9.15—in London)”.

I am not making any particular proposals on this issue; I am simply indicating what other organisations support. If I am asking for an inquiry, it would be rather inconsistent for me to state what policies I particularly supported. The trust wants internships to be advertised publicly rather than being filled informally, and recruitment processes to be fair, transparent and based on merit. That reflects a statement issued by BIS regarding internships, so I do not think it contradicts anything that is already BIS policy.

An Ipsos MORI poll of 1,700 adults in England for the charity suggested that 70% felt that unpaid internships were unfair as only the wealthy could afford to take them, and some 55% agreed that internships of up to six months should pay at least the minimum wage, with 73% supporting it for placements of more than a year. The YouGov polling shows that 65% of businesses support the proposal to end unpaid internships, presumably because it gives an unfair advantage in certain cases if you do not level the playing field. Bodies such as the Institute of Directors, UK Music, the Royal Institute of British Architects and a range of bodies representing the PR and creative industries also support getting rid of unpaid internships. Alan Milburn, chair of the Social Mobility and Child Poverty Commission, has called on policymakers to adopt a four-week limit on unpaid internships. As I have said, BIS supports an open, fair and transparent process of appointment to internships and indicates:

“Anyone who is a worker is entitled to be paid at least the minimum wage, this includes interns who fall into the worker category”.

Thereby hangs the problem. The lack of clarity about what constitutes an internship is frustrating the application of the National Minimum Wage Act.

In conclusion, internships are becoming essential for access to many professions. Because a high number are unpaid and unaffordable to those from ordinary backgrounds, too many young people are being excluded from the opportunities that they deserve. Although I accept that there will always be a need for casual labour in a flexible labour market, the current position is unfair and disproportionate. A civilised society should be prepared to look at the obvious nooks and crannies in its system, not least if it might go some way to solving our poor productivity record. I cannot help but think that the increasing casualisation of our labour force and our poor productivity record have something in common. I beg to move.

[Lord Watson of Invergowrie]

My Lords, I came along this afternoon intending to support my noble friend Lady Donaghy on this amendment and I shall attempt to do so, but I regret that so comprehensive has been her advocacy of it that it has left me with little to say. Perhaps I might stress two or three of the points that she made.

One of the aspects that worry me is undoubtedly the fact that unpaid internships are, by their very definition, exclusive to people who, by whatever means, are able to have their costs of living covered while they undertake them. That necessarily makes them exclusive and is unfair. Some people would say that life is unfair; yes, of course it is, but in terms of employment we can try to make the playing field as level as possible. I see no reason why anybody undertaking an internship of more than one month should not be paid. Up to one month, it may be genuine work experience; beyond that, it is a bit more. While the person may find personal benefit, the employer gets a benefit as well. That very important point should be looked at.

There is also a rather disturbing trend now of companies emerging that will charge people a fee for placing them in an internship. That is worrying and, while some of them are paid, you may have to pay even to get on to an unpaid internship. I do not believe that that is right. There are also situations where auctions for internships are held. They sometimes involve charities and, on the face of it, that is worth while but, again, it suggests that it is not an appropriate way to bring anybody into the workforce, paid or unpaid. I regret that development.

Most of all, it is important that anybody doing a job should be paid the rate for that job. Some Members of this House and some Members of the House just down the Corridor need to look at their own practices in this respect, because it has been revealed that there are more than a few unpaid internships within the Palace of Westminster. That does not set any kind of positive example for keeping anybody on beyond a month. With those brief remarks, I am pleased to support the amendment in the name of my colleague and noble friend Lady Donaghy.