Student Loans Company

Debate between Viscount Younger of Leckie and Lord Mendelsohn

Wednesday 1st May 2019 Lords Chamber

[Viscount Younger of Leckie]

I think that I can answer the noble Lord’s first point by saying that it is a regular review, but I have no doubt that it will take account of the issues that have cropped up in recent years—I would be very surprised if that was not the case. If it is not the case, I shall certainly write to the noble Lord and clarify that.

The noble Lord, Lord Mendelsohn, spoke about governance shortfalls. As he will know, the SLC is a wholly government-owned company overseen by a board which currently consists of a non-executive chair, five non-executive directors, the chief executive, the deputy chief executive, the CFO and the company secretary. The board ensures that effective corporate governance arrangements are in place and provides assurance on risk management and internal control. There is a little more that I could say but, due to lack of time, I just want to make it clear that these structural arrangements are in place.

However, there is more to it than that, because the Government are confident that the SLC now has a leadership team in place that is equipped for the challenges ahead, under the able leadership of Paula Sussex, whom the noble Lord mentioned. Paula and her team, in conjunction with the DfE, have now begun to implement a wide-ranging, multi-year, multi-million-pound transformation programme. This will transform the way the SLC interacts with its customers, digitising processes and ensuring that the SLC communicates with its users in a way that is familiar to them—online, real-time and available 24/7.

[Lord Mendelsohn]

Just to clarify, is that the transformation programme that has operated for the last couple of years, the one that Steve Lamey was responsible for?

[Viscount Younger of Leckie]

I know that Steve Lamey has been involved in it, so the answer is yes, but it has been taken forward from the work that he has done.

The noble Baroness, Lady Garden, asked whether the new CEO had met Ministers, and I confirm that the Universities Minister met the CEO fairly recently in Glasgow.

I will move on to processes. The SLC is looking to remove inefficient manual processes that drive the small number of complaints it currently receives. The number of complaints is very small indeed: fewer than three complaints per 10,000 applicants and around one complaint per 10,000 loan repayers. Although the number of complaints is low, the SLC is seeking to reduce this further.

Time is running short and I have quite a lot more to say. We believe that the transformation programme has delivered real benefits already to the SLC’s workforce. The noble Lord, Lord Mendelsohn, mentioned pay. Recognising, as he did, the major constraining factor of recruitment and retention, which impacts on achieving even better performance from the SLC, 1,600 of the lowest-paid staff have just been awarded an in-year pay increase of up to 8%. I hope that that will address some of the recruitment problems and improve staff retention rates.

As I mentioned earlier, we are strengthening the SLC’s board through the appointment of non-executive directors with financial and public sector experience, which will also help. We will launch a fair and open campaign to recruit a new chair during the next few weeks, ensuring that the excellent work done by the incumbent, Chris Brodie, is continued when his final term of office ends in January 2020. I will write to the noble Lord, Lord Mendelsohn, about the loan book, giving him some details that I have. Bearing the late hour in mind, I will write to all three noble Lords who spoke to respond to any questions I have not answered. I thank the noble Lord, Lord Mendelsohn, once again, for securing this important debate and I hope he feels we have explored the subject. As I said earlier, there is more to do to be sure that the SLC is in very good shape and well prepared for the future.

Unpaid Work Experience (Prohibition) Bill [HL]

Debate between Viscount Younger of Leckie and Lord Mendelsohn

2nd reading (Hansard): House of Lords
Friday 27th October 2017 Lords Chamber

[Viscount Younger of Leckie (Con)]

My Lords, I congratulate my noble friend Lord Holmes of Richmond on securing a Second Reading for his Private Member’s Bill. I commend him also for all the work he is doing to encourage a fairer and more balanced society for everyone, regardless of an individual’s background.

I start by declaring an interest in that I come to this topic with a business background, both in the City and financial services, and with over 30 years’ experience in HR, including recruitment. I wholeheartedly share in the spirit of this debate. It is not right that in 2017 people are being held back from realising their full potential because they are unable to access opportunities that are kept for the privileged few. I have listened carefully to some disturbing anecdotes this afternoon, not least from my noble friend Lady Stowell and the noble Lord, Lord Mitchell. As I am sure my noble friend Lord Holmes is aware, the Government are committed to giving everyone a fair start in our economy. This includes people from socially disadvantaged backgrounds; black, Asian and minority-ethnic groups; women; and of course young people.

I touch now on the great progress that the Government have made in creating a stronger labour market for younger workers. This group has seen a growth in median earnings which has been stronger than average. The unemployment rate for this group fell by 1.4 percentage points between quarter 2 2016 and quarter 2 2017. The employment rate for 21 to 24 year-olds is now at a record high of 80%. We have clearly demonstrated that an increasing minimum wage can go hand in hand with increasing labour market participation.

The principles of the national minimum wage remain the same today as when they were introduced by the Labour Party back in 1999. It was introduced and designed to protect the employment prospects of the lowest-paid workers while ensuring that they received fair pay for each hour they worked. In April 2016, this Conservative Government went one step further by introducing the national living wage, which gave over 1.7 million people aged 25 and over a pay rise, leaving them with more money in their pockets. It is right that we continue to seek independent and expert advice from the Low Pay Commission when setting these minimum wage rates. The Government will continue to set an hourly minimum threshold which employers must adhere to, while commending those employers who pay more when they can afford to do so.

I turn now to the essence of my noble friend’s Bill. I am supportive of the good intentions that underpin the Bill and agree that it is right to stop the exploitation of workers. Let me be clear that by “exploitation” I am referring specifically to individuals who are working and should be paid the minimum wage but instead receive less than the minimum or even nothing—and we have heard some stories this afternoon to that effect. The Bill is right also in its adherence to the principle of giving everyone equal access to opportunities. It is right that this Government champion diversity.

I acknowledge the words of my noble friend Lady Wyld, who stated that unpaid internships are an open secret. The Government recognise that unpaid work experience is an issue and are committed to stamping out this exploitation when an individual falls within the definition of a “worker” for minimum wage purposes. However, I hate to disappoint the noble Lords, Lord Mitchell and Lord Haskel—and there is a “however” to this. The current legislation already sets out that all workers are legally entitled to the minimum wage; and most importantly, as my noble friend Lord Flight said in citing the excellent example of Metro Bank, that entitlement applies from day one. The entitlement applies regardless of how the employer or worker describes the relationship in a contract, which can be verbal or written.

Most employment protections in the UK apply to individuals who are defined as an employee or worker. There is no statutory definition of work experience or indeed internships. However, if it were to be defined, it is likely that a new employment status would need to be created, which in itself would open the debate about whether we extend further protections to this new category, such as holiday pay and sick pay. A new employment status is likely to create unintended consequences, such as businesses not offering any work experience opportunities or, at worst, encouraging rogue employers to seek loopholes by offering work experience for less than four weeks—funnily enough, for three weeks and six days, as my noble friend Lord Flight hinted—which would mean that individuals were not entitled to the minimum wage from day one.

I took note of the interesting speech from the noble Lord, Lord Winston, but I agree on this occasion with the noble Lord, Lord Mendelsohn. On the one hand, I understand the point that the noble Lord, Lord Winston, made about his particular sector and its highly technical area, and I take into account what he said about the opportunities in the NHS leading to further time being needed. But I was disappointed not to hear—unless he chose not to say—whether the workers were paid any expenses at all. The noble Lord may like to clarify that later. I understand his angle and where he was coming from.

As my noble friend Lord Holmes mentioned, the voluntary sector has existing legislation that covers volunteers and voluntary workers. The noble Lord, Lord Mendelsohn, also raised that. The key for volunteers, who are not legally entitled to the minimum wage, is that they have the flexibility to come and go as they please and they do not have any employment contract to perform work or provide services.

This Government will continue to encourage work experience, internships and voluntary opportunities. We want to encourage initiatives that provide individuals with an opportunity to watch and learn, to try their hand at particular tasks or give something back to their community. These opportunities are vital to so many individuals up and down the country. Their scope is so varied. This flexibility is beneficial for individuals and employers.

I am keen to focus also on the issue of social mobility, which featured heavily in today’s debate. Increasing social mobility is a top priority for the Government. Social mobility is essential to make our country one that works for everyone, not just the privileged few. We want to create a society that is fair and rewards talent and hard work. The education system and employers must be part of the answer to that. It is important for employers to increase the diversity of their workforce. The best employers are already taking some important steps, including engaging and supporting young people in schools, introducing fairer recruitment practices, removing barriers, opening up alternative routes to entry and monitoring progress. But there is more to do to ensure that background is not a barrier to a good career, and this Government are taking that challenge seriously.

The Department for Education is committed to working alongside the Social Mobility Commission to tackle the barriers that can hold people back from fulfilling their ambitions. We value the wide-ranging work carried out by the commission, including its work on a Social Mobility Employer Index. The index is a joint initiative between the Social Mobility Foundation and the Social Mobility Commission, in partnership with the City of London Corporation. It ranks Britain’s employers for the first time on the actions that they are taking to ensure they are open to accessing and progressing talent from all backgrounds and it showcases progress towards improving social mobility.

My noble friend Lord Holmes asked about Whitehall’s record on unpaid internships. I reassure him that we are taking the opportunity to enable social mobility in Whitehall. The Summer Diversity Internship Programme is a multi-award-winning programme that gives individuals from diverse backgrounds the opportunity to see what a career in the Civil Service is like, and 100% of those surveyed would recommend it. I reassure the House that it is paid.

My noble friend Lady Brady raised the important point about careers advice. The Government are taking steps to improve careers education and guidance for all ages. We are investing more than £70 million this year to support young people and adults to get high-quality careers provision.

Activities involving employers such as careers insights, mentoring, work tasters and work experience are crucial to giving young people the skills they need to succeed. The careers statutory guidance makes it clear that schools should offer work placements, work experience and other employer-based activities as part of their careers strategy for years eight to 13 pupils. We are providing valuable support for schools through the Careers & Enterprise Company, which has been tasked with increasing the level of employer input into schools and colleges.

Part of the issue is enforcement. It is about enforcing the existing legislation to enable social mobility. To be clear: it is against the law for employers not to pay at least the minimum wage to workers. We want work to pay and to have zero tolerance for employers opting out of their legal responsibilities. This is part of the reason that we have increased HMRC’s enforcement budget to a record level of £25.3 million for 2017-18. These two points were raised by my noble friend Lord Holmes. We want to stamp out any temptation to pursue non-compliance, so we have increased the maximum penalty imposed on an employer. Last year the penalty doubled to 200% of arrears owed to workers up to a maximum of £20,000 per worker. We have also continued the Government’s naming scheme, which has become increasingly effective as a deterrent. We have named more than 1,200 employers to date and we can see its effectiveness from the number of representations we get from employers seeking to be exempt from the naming process. There is a growing realisation among employers that naming can damage brands.

We also recognise that we have a responsibility to make sure that individuals and businesses—

[Lord Mendelsohn]

I am sorry for interrupting the Minister, but in reciting those numbers about the budgets and enforcement measures that are available, can he state whether they relate to HMRC’s activities in general? Which part of the budget of those sums relates to interns?

[Viscount Younger of Leckie]

I will write to the noble Lord about the specific figures relating to interns. I sought to make the point in general that in having the naming scheme, when the names go up on the board or when they are broadcast, particularly in local newspapers, it is damaging in itself. It is perceived as being more damaging and obviously can sully the reputation of employers in terms of both recruitment and the products that they are selling.

We also recognise that we have a responsibility to make sure—

--- Later in debate ---

[Viscount Younger of Leckie]

Two or three Peers have said that there are flaws in the Bill. I would not necessarily go that far, but the tenet of my argument is that it is enforcement that counts. As I said earlier, we are making great efforts to improve enforcement in this area. The point is that there has to be a distinction between the different types of work. If somebody is defined as a worker, they are doing work for which they should receive remuneration from day one; otherwise, we could be led to form a new definition of, say, a work experience worker, but I have made it clear that we believe there would be some unintended consequences in so doing.

[Lord Mendelsohn]

Will the Minister clarify—because, like Matthew Taylor, he mentioned making sure that the law is clear on this—and describe the difference between an internship as work experience and an internship as work?

[Viscount Younger of Leckie]

The description is that any complaint goes to HMRC and, if a complaint has been made, a distinction has to be made and HMRC has to take a view on whether meaningful work is being carried out—in other words, a nine-to-five day is being done, not just work experience where somebody is looking over somebody’s shoulder. That distinction has to be made. Again, I make the point that we could go down the route of having a new definition under the heading, “Work Experience”, but that would lead to all kinds of unintended consequences.

Higher Education and Research Bill

Debate between Viscount Younger of Leckie and Lord Mendelsohn

Report: 1st sitting: House of Lords
Monday 6th March 2017 Lords Chamber

[Lord Mendelsohn (Lab)]

My Lords, I welcome these amendments. Amendment 3 has been signed by my noble friend Lord Stevenson of Balmacara. Of course, we will return to this subject when we discuss the research parts of the Bill next week, with a much more substantial amendment which talks about some of the elements of co-operation.

We welcome the amendment but share the view that it does not go far enough. Reporting on how these organisations co-operate is not about whether they should co-operate or even the nature of that relationship—how strong or firm a relationship they would want to forge. The amendments cause some degree of limited expectations and even an expectations mismatch. One of the briefings that I received for this seemed to believe that this would be subject to an annual report in and of itself. That is not the case. This is within the context of the existing annual reports.

Given that the reforms are about both policy design and a high level of operational change, delivery is a very important factor. It is noticeable that the Nurse review, which considered the operational elements of the creation of UKRI and the importance of weaving it into the right tapestry of partners, had a clearer and more prescriptive approach. Notwithstanding these concerns, which we will debate later, we support the amendment and hope to make further improvements later on.

[Viscount Younger of Leckie]

My Lords, I am pleased that we have found general common ground on this matter, although I picked up from this short debate that my noble and learned friend Lord Mackay, the noble Baroness, Lady Brown, and the noble Lord, Lord Mendelsohn, feel that perhaps we should go a little further.

I thought that my noble friend Lady Rock put it rather eloquently: an emphasis on working together will be expected to run through the leadership and management of both organisations, supported by a legal framework that will be sufficiently flexible to deal effectively with areas of shared interest. Additionally, the government amendments will require the organisations to state in their annual reports how they have co-operated with each other over the reporting period. We consider that this an efficient way of ensuring transparency without the creation of additional reporting bureaucracy.