Zero-hours Contracts

Alison McGovern Excerpts

Wednesday 16th October 2013 Commons Chamber

[Mr Umunna]

I thank my hon. Friend for his intervention, and he is right to point that out. We are in the fourth year of this Government and blame is continually attributed to the Labour party. This Government ought to look at what they are doing to our country and our economy.

My hon. Friend the Member for Coventry South (Mr Cunningham) made a point about insecurity at work. That insecurity is not just born out of three wasted years of a flatlining economy following the Government’s 2010 comprehensive spending review which caused confidence to fall and demand to nosedive; it is also because the nature of work has changed in recent years. Half the rise in employment since 2010 has been in temporary work, driven primarily by people doing temporary jobs because they cannot find permanent work—more than 500,000 people fall into that category—while record numbers of people are in part-time work who would prefer to be working full time, meaning that there is huge underemployment.

But perhaps the most shocking symptom of the changing nature of work is the proliferation of the use of zero-hours contracts, under which a person is not guaranteed any work, is usually expected to be around whenever the employer wants them to be and is paid only for the work he or she gets, meaning, as my hon. Friend the Member for Coventry South said, that individuals engaged under these contracts never know when work will come and therefore whether they can sustain themselves and their families week to week.

[Alison McGovern (Wirral South) (Lab)]

Is it not tough to listen to the Prime Minister giving answers about rising employment, given the type of employment that that represents, as we have just heard? Should the Government not come clean about the falling claimant count and listen to what my hon. Friend is saying about the type of work people are having to go into?

[Mr Umunna]

This is a key point. Will any job do? We are clear that any old job will not do. We want to ensure that people have decent work that is paid a salary they can live off and which is secure too. That has to be our ambition for the country.

I do not deny that these contracts have been in use for many years—I will turn to their use in the House a bit later—but until recently they were very much the exception to the rule. The problem is that now they are becoming the norm in some sectors, with the Chartered Institute of Personnel and Development estimating that up to 1 million people are on such contracts.

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[Vince Cable]

There are still significant opportunities for people who are subject to unfair dismissal. We reformed the system because we considered that it provided a very significant barrier to small and medium-sized growth companies and thus to employment opportunities with them. We think we have got the balance right.

[Alison McGovern]

Let me take the right hon. Gentleman back to the statistics for one minute, if the House will forgive me, because they really matter. The statistics provide the only way of finding out what is going on in our economy from the Government’s point of view. The care Minister told me that 300,000 people working in the care sector were on zero-hours contracts, so that is what the Government say; yet the Office for National Statistics—and therefore the Government again—have reported that there are 250,000 such workers in that sector. That discrepancy cannot stand. In a recent parliamentary answer in October, one of the Secretary of State’s Ministers said that his review did not seek to collect any statistics, but the Department is now reporting an inconsistency in them. Does not the right hon. Gentleman feel that his Department can do better than that?

[Vince Cable]

That is precisely why I am in touch with the head of the ONS, so that we can get some high-quality and consistent data. That is the whole point of the exercise.

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[Guy Opperman (Hexham) (Con)]

It is an honour and a privilege to speak in this debate and it is right that we debate low pay and the nature of contracts. I should make a declaration: as a former barrister, I was unquestionably on a zero-hours contract in that I was an employee whose employer was not obliged to give me work, and I had to accept that. It is certainly the case that in rural Northumberland there is an acceptance that these types of contracts help to plug a gap. I am not going to attack local authorities, whether Liberal, Conservative or Labour, which have utilised them in the past and continue to do so. I suggest it is a question not of this House being for or against zero-hours contracts, but of this House being against inequitable and exploitative zero-hours contracts.

[Alison McGovern]

I am intrigued by what the hon. Gentleman says about his previous experience. In a report that I and two of my colleagues produced, one person told us:

“It has been very difficult as I want to move on with my life but can’t as I don’t know when and if I will be next out of work so this stops me from committing into anything financial like moving out or furthering my education”.

I hope he can identify with that experience, perhaps not in his own life, but in reality, in our economy now. He says we should not be for or against, but I really hope he is against that sort of experience, where people cannot commit to bettering themselves because of these sorts of contracts.

[Guy Opperman]

As a barrister, I spent two and a half years without a contract. With respect, I therefore suggest I do have some experience of that, with no contract whatsoever. I accept that it is right that this House is addressing these issues, and it is right that we are collecting and assessing evidence. I welcome the fact that the Secretary of State has put in place the consultation and that over this winter we will be obtaining evidence on this issue.

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[Alison McGovern (Wirral South) (Lab)]

I shall begin my contribution by continuing to quote from some of the people who kindly gave their view to the report that I and two colleagues undertook earlier this year. I pay tribute to my right hon. Friend the Member for Knowsley (Mr Howarth), whose idea it was that we do that. He was very insightful in encouraging me and my hon. Friend the Member for Liverpool, Wavertree (Luciana Berger) in our campaigning on the issue.

The people who shared their experience with us were brave to do so and I want their words to be heard in the House. The example that I gave when I intervened earlier shows the impact of zero-hours contracts on ordinary members of the work force. That person said:

“It has been very difficult as I want to move on with my life but can’t as I don’t know when and if I will be next out of work so this stops me from committing into anything financial like moving out or furthering my education more as I do not know if I will be in long term work as I am always waiting for them words that I am now a permanent employee. This has not only brought stress on myself but people that are nearest to me as it tends to be them that I vent my frustration to”.

That shows not only the economic impacts, but the social and emotional impacts of those contracts.

Somebody else told us that it was

“Awful. It’s depressing and demoralising. I feel I have no rights and constantly question ‘why am I even bothering to work?’ Some weeks it would be more beneficial for me to sign onto job seeker’s allowance”.

I am sure that is not what this Government want. It is certainly not what those of us on the Opposition Benches who believe in the dignity of work want to see, but I am guessing that it is not even what this Government want—people who feel that it might be better for them just to claim benefits.

[Charlie Elphicke]

The hon. Lady makes a very powerful speech. Does she welcome the fact that the Business Secretary held a review over the summer and is conducting a consultation? Does she, like the hon. Member for Newcastle-under-Lyme (Paul Farrelly), regret that more was not done in past times?

[Alison McGovern]

My grandfather, who was a great trade union rep, always told me: “When you go in and see the boss, never say you’ve done nothing; always say you’ve not done enough.” I think my hon. Friend has learned that lesson.

The big problem is the one that I raised earlier with the Secretary of State, which is that the Government seem to be all over the shop with the number of people affected and what is really going on. My only regret is that they did not take the opportunity of the summer to clear the matter up properly. We will engage with the Government and move forward to try to get a resolution, especially on the care sector, which is very important to me. I shall come on to that.

First, I want to say something about values. Although the economics are extremely important, so are the values. Some of the worst effects of zero-hours contracts are felt not where people have a high level of skills, but where people have little other option. In the care sector, for example, workers often have a low level of skills and are often women, possibly later in their career, who already have little power in the workplace. When zero-hours contracts are used in place of proper management, they are left in a terribly vulnerable position. It leaves them, in effect, begging for work. To me the indignity of begging is not tolerable. It is not tolerable for people to beg on the street and it is not tolerable for people to beg for work. That is what is wrong with zero-hours contracts. They risk far too much power being put on one side of the table in discussion of the contract of employment. This is an economic issue, of course, but it is a question of how we want to live together and relate to each other in society.

We are storing up some serious economic problems with zero-hours contracts. In the short term they involve a cost because people’s income is likely to be reduced as a result of their underemployment. If they are wasting time constantly trying to get more hours, as we heard in our survey, people have no time left to find another job, which might be a better job and might improve their prospects, which would, in turn, improve their and their family’s capacity to spend money and keep our economy going. Also, the insecurity that they are suffering means that in the short term they cannot commit or make spending choices that would otherwise be helpful.

By the way, we heard examples of people who were constantly told that they were going to get more hours than they did. That short-term impact of feeling that they would have money coming in and then finding that they did not has a massive knock-on effect on the rest of our economy, but it does not affect the whole economy equally or in the same way. The parts of the country with a lower skills base are much more likely to suffer from this, so zero-hours contracts feed into the imbalanced economy that we already have.

There are long-term economic effects from such insecurity. I quoted earlier from one of the people in our report speaking about their inability to invest in themselves, for example by going back to school, college or university and making a long-term choice to improve their prospects, which they felt unable to do because they did not know what was going on at work. Similarly, people were unable to get a mortgage or decide to make a long-term investment in their housing, which will have a knock-on impact. A further effect is the impact on the skills base of our country.

I am aware that in the case of students, who have been mentioned as an example, zero-hours contracts are a fair arrangement. There is no power imbalance and that is fine. I am also aware that for some people on zero-hours contracts there is an investment in their skills. But do the Government think it is more or less likely that employers in this country would invest in the skills of people who had permanent, stable contracts or those whom they had put on zero-hours contracts? I think that the skills base in particular parts of the country will inevitably diminish as a result of this so-called flexibility in the labour market.

Zero-hours contracts clearly do not affect every part of the country in the same way. The Merseyside city region has developed well over recent years—against expectations, I think—and we did much better through the recession than anyone thought we would. I am extremely proud that the Liverpool city region is doing well—no one will catch me running it down. However, the biggest barrier to Merseyside’s development is our people’s level of skills. We cannot afford to have employers who are not committed to investing in our people, not just because it is bad for our people today and they do not get the opportunity to improve themselves, but because it stores up problems. If the Government are not prepared to take this matter seriously because of concerns about the amount of money people will have in their pockets, I hope that they will take seriously the long-term impact such contracts have on the prospects for a balanced economy. I wanted to ask the Secretary of State to include the impact on skills in his review and consultation. He is no longer here, but I am sure that the Minister will pass on the request.

What is the solution? I am sure that it will come as no great shock to the House to learn that I am extremely supportive of the Labour policies outlined in the motion. I am incredibly pleased that the leader of my party has chosen to take such a stand on this issue. It is not fair to say that the previous Labour Government did not act to protect vulnerable people in the work force. One of our greatest achievements was the national minimum wage. The regulations that implement it contain all kinds of requirements to ensure that people earn a decent amount of money. That is at the heart of this debate. I think that we ought to be extremely proud of that institution that protects people in our country.

However, it is right that we should go further, and it is absolutely right that we should crack down on exclusivity and look at the people who work regular hours but whose employers are not prepared to commit and give them a proper contract. In the short term, the report that colleagues and I produced suggests a code of practice, and that has been the first stage in our discussions with employers and others. I think that we can get on with that. If there are employers who want to discuss that with us, as there are in Merseyside, we should do so.

I also want briefly to pay tribute to Unison for its work as a trade union and for its ethical care charter. It is a shame that the right hon. Member for Bermondsey and Old Southwark (Simon Hughes) did not congratulate Southwark council—I speak with a slight interest, as I am a former deputy leader of the Southwark Labour group—on adopting the stance that Unison did a good job in articulating what is needed in the care sector. We know that in that sector zero-hours contracts are wrapped up in a whole other agenda about ensuring that people have proper dignity and respect. I hope that Ministers will focus their review on what is going on in the care sector. There might be whole swathes of the economy where there are fewer problems, but there most certainly are problems in the care sector, and I hope that Ministers will pay attention to that.

[Mr Newmark]

I have been listening to the hon. Lady carefully but am still not clear where she is coming from. Is she objecting to the use of zero-hours contracts or simply to the abuse that can occur when they are used?

[Alison McGovern]

As I said earlier, there will be examples of employment—student employment is the classic example—where there is no power imbalance and where we can look at the practice in an industry and say, “This could be okay.” I have said that from the outset and all the way through this debate. However, if the hon. Gentleman would like to read the report that my colleagues and I put together, he will see quotes from people who spoke with us about their experience. If he is not concerned about the experience of those workers, I think he should be.

[Mr Newmark]

rose—

[Alison McGovern]

I hope that the hon. Gentleman is rising to tell me that he is concerned.

[Mr Newmark]

I totally agree with the hon. Lady that we should be stamping out abuse, but I have listened carefully to all Opposition Members who have spoken and it seems that their direction of travel is to cut zero-hours contracts completely. The Government want to stamp out the abuses, but does the hon. Lady—I will ask her once again—want to abolish zero-hours contracts completely?

[Alison McGovern]

I will end this here, because other Members wish to speak. That is not what I have said, and it is not what other Members have said.

In conclusion, zero-hours contracts are clearly a massive issue for our economy. We have seen the Government move from saying at the beginning of the year, “This isn’t a problem and we don’t know what the statistics are saying” to saying now that it is an issue. I only wish that they could have done more. I absolutely applaud the motion.

[Several hon. Members]

rose—

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[Michael Fallon]

I have been here throughout the debate and have listened to every speech since about a quarter to one this afternoon. I certainly listened to the hon. Lady’s speech, which was a very good one. I am simply pointing out the difference between those hon. Members who want to get rid of flexible-hours contracts altogether, and others who can see their value and want to preserve the choice so that those who are happy to choose them are able to do so.

My hon. Friend the Member for Dover (Charlie Elphicke) drew attention to the issue of eligibility for mortgages and rental tenancies for those who are on such contracts. It is important that we look at that aspect. The hon. Member for Edinburgh East (Sheila Gilmore) raised the issue of the application of flexible-hours contracts in the care industry, and spoke about the number of such services that have been contracted out. However, a great number of councils up and down the country, and not just subcontracted firms, are using flexible-hour contracts: Doncaster, Southwark and Liverpool, for example. The issue is not simply one for privatised contracted labour.

[Alison McGovern]

The Minister said that he was disappointed that no one had mentioned the unemployment figures. In fact, in an earlier intervention I drew attention to the relationship between zero-hours contracts and the under employment that they represent, and what is happening to the claimant count. Does the Minister feel that we need to investigate the issue, and does he feel that that under employment is serious and should be viewed alongside the falling claimant count?

[Michael Fallon]

I shall be happy to consider the hon. Lady’s point about under employment if she will recognise the considerable progress that the Government have made in increasing the total number of people in work since 2010.

Concerns have been expressed about the way in which these contracts work, which is why the Government have listened and decided to act. As my right hon. Friend the Secretary of State said, we will shortly launch a consultation and seek views on the issues that are causing concern—issues such as transparency in contracts and the availability of information, advice and guidance to ensure that individuals are aware of their rights and companies are aware of their obligations to provide, for instance, holiday pay, sick pay, redundancy pay and travelling time payments. As I said to my hon. Friend the Member for Burnley, we will also seek views on the issue of exclusivity in the employment contract.

However, while it is right to consider all those issues, we also need to ensure that the flexibility afforded by contracts of this kind to businesses and individuals is still available. A flexible and dynamic labour market is essential to facilitate growth in our economy, and to give businesses that want to expand the opportunity to do so.

As there is no single definition of a variable-hours contract, we must proceed with caution when considering the action that we might take to ensure that there are no unintended consequences. We must consider all the employment arrangements that could fall within the definition, such as work through agencies, which were mentioned by the hon. Member for Newcastle-under-Lyme. We must also ensure that we do not act in haste.

We cannot accept the motion, because it prejudges the consultation in calling for a ban, and calls for evidence that we have already begun to assemble. I should add, however, that some of my hon. Friends suggested that the last Labour Government had done nothing about this matter during their 13 years in office. That is not wholly true. On the contrary, the last Labour Government looked at the issue—and then did nothing. They published a White Paper entitled “Fairness at Work”, which discussed variable-hours contracts, and concluded:

“The Government wishes to retain the flexibility these contracts offer business”.

A couple of years after the White Paper, the then Business Secretary, the right hon. Member for Kingston upon Hull West and Hessle (Alan Johnson), said:

“The Government consider that zero hours contracts can contribute to the flexibility necessary for a modern labour market”.—[Official Report, 2 March 2000; Vol. 345, c. 344W.]

Unlike the last Labour Government, we will act. We will hold a full consultation. We will consider important issues such as restrictive exclusivity and the alleged lack of transparency.

Today we have heard Opposition Members express indignation about a flexibility that they themselves endorsed in government, and we have heard them speak of an alleged abuse about which they did nothing in government. No one wants people to be exploited; no one wants people to be tied to contracts that are unnecessarily restrictive, and in which there is no genuine transparency. This Government are acting, whereas the last Government failed to do so.

Question put.