Brexit: Protection for Workers

Debate between Baroness Burt of Solihull and Lord McNicol of West Kilbride

Thursday 7th March 2019 Lords Chamber

[Lord McNicol of West Kilbride (Lab)]

My Lords, I first thank the Minister for repeating the Statement made in the other place and especially for his kind words about Lord Bhattacharyya.

The crux of the Government’s announcement is the two amendments they will table to the implementation Bill. We are told that these seek to ensure there is no regression of workers’ rights, and that Parliament will be given an opportunity to consider how rights in the UK tally with those in the EU. These are noble aims which I am sure this House can get behind. However, I am afraid that on this side of the House we have considerable concerns over whether these amendments will achieve and deliver this.

I remind the Minister of the comments that Frances O’Grady of the TUC made yesterday in response to the announcement:

“In the face of a government determined to reduce rights, these measures would in no meaningful way compensate for the loss of the protections that currently exist”.


The TUC and various unions have been clear in their response to the proposals, saying that they are not good enough and fail to protect workers after we leave the EU. Noble Lords will not be surprised to hear that I agree with those statements.

I turn to specifics. I am interested in the Government’s process of getting to this announcement. Can the Minister detail his department’s process of consultation with the different unions and the TUC? The issue at the heart of this announcement is that, even if a Statement by the Government notes that legislation would in fact lead to a regression of rights, there is no power to stop the Government proceeding with their intended course of action. Can he explain how these amendments would stop a Government reducing workers’ rights if they wanted to? If he thinks I am being a bit unfair, I remind him of the working time directive. It was a Conservative Government who sued the European Commission, claiming that there was no legislative basis for the directive since working time had nothing to do with health and safety at work. Luckily for workers in the UK, the Government lost.

On the process of adopting future improvements in EU legislation, the proposal is equally lacking. The only means of challenge is through Parliament, not the courts, and thus subject to any Government’s majority—not material facts that could be legally tested. Furthermore, these proposals apply only to changes to primary legislation. Any other forms of legislative change would not be covered. Given that the bulk of UK legislation to implement EU law is secondary legislation—the Working Time Regulations, TUPE and health and safety regulations, to name but a few—would the examples given above be covered under the new proposals? As we have seen recently, Commons procedures may not permit sufficient amendments to actually deal with all the problems at hand.

The Statement uses the words “standards” and “reduction of standards” and I seek clarification from the Minister on this. In speaking against Amendment 3 on the Trade Bill last night, the Minister said:

“First … The term ‘standards’ does not have a single legal definition which can easily be called upon … Secondly, on the notion of ‘reducing’ standards, how the Government would prove that they were or were not reducing them would be problematic”.—[Official Report, 6/3/19; col. 631.]


The Government cannot have it both ways. Either the use of the terminology “standards” and “‘reducing’ standards” is correct and proper or it is not.

The Statement provided today is not good enough. The comments made at its beginning suggesting that the Minister’s party has suddenly assumed the role and mantle as a champion of workers and working people is baffling. Annual earnings are more than 3% lower than they were in 2008 and nearly 4 million people are now in insecure work. If the Government are serious about workers’ rights in the UK, they have a long way to go to prove it.

[Baroness Burt of Solihull (LD)]

I agree with the Minister that we have a proud record of protecting workers’ rights. As he said, in many cases they are stronger than in European law.

I welcome the enforcement measures announced by the Secretary of State yesterday on existing rights. We all know that it is pointless introducing legislation unless someone intends to enforce it, and enforcement costs money. We on these Benches will look closely at the forthcoming spending review to check that the Secretary of State has been as good as his word.

What we see in the Statement yesterday and the Opposition’s response is a playing out of the traditional distrust between the two parties. The Government seek to assure the Opposition that they will not dilute workers’ rights post Brexit. However, I agree with Labour that the Statement does not provide all the protections that would guarantee that workers’ rights will not fall behind those enjoyed by workers in the European Union.

In the Commons yesterday Opposition spokesperson Rebecca Long Bailey, and the noble Lord, Lord McNicol, this afternoon, made the telling point that the promise given by the Government does not apply to secondary legislation, which could allow each existing EU-derived right to be watered down with ease. This latest move has been described as a cynical attempt to buy off wavering Labour MPs from leave constituencies so that they can justify voting with the Government on the EU withdrawal and implementation Bill. We on these Benches will not fall for it and the Government have a long way to go yet to satisfy a distrustful Labour Party.

The arithmetic does not yet stack up in the Government’s favour and, as things stand, they are destined for another whopping defeat in the Commons next week. The only way to guarantee that British workers’ rights keep parity with those of European workers is for Britain to remain within the EU. Why do not Labour and the Government realise that it is in the interests of all the people they represent to give them a say and back a referendum on the deal?

Business Contract Terms (Assignment of Receivables) Regulations 2018

Debate between Baroness Burt of Solihull and Lord McNicol of West Kilbride

Wednesday 17th October 2018 Grand Committee

[Baroness Burt of Solihull (LD)]

My Lords, these regulations address a problem that I did not know existed. The colloquial expression for “assignment of receivables” is factoring, and that is what I know it as. Why would companies build these terms into contracts, with the exceptions permitting, unless there was a question mark about their payment? I will be interested to hear the Minister’s comments about that. It seems unjustified. I understand the importance of being able to get hold of money for your contract early on, but if companies paid in a more timely way, factoring would perhaps not be necessary. Those are just a couple of comments, but I wholeheartedly welcome the regulations.

Will the Minister explain paragraph 10.13 in the Explanatory Memorandum? It is headed “Additional Exclusion”. It states that contracting parties need to be certain that they are dealing with each other rather than an assignee. Does the Minister understand that to mean subcontracting? If he does not, are there other examples of what could be meant by that? Other than that question, I welcome this legislation.

[Lord McNicol of West Kilbride (Lab)]

I am grateful to the Minister for the introduction to this SI. This is my sixth week in your Lordships’ House and it is a pleasure to be speaking on my first SI. If I make any procedural or other errors, please forgive me. I am still learning and have a long way to go.

Invoice financing as set out in paragraph 7 of the Explanatory Memorandum is one way of securing working capital. More simply, it is the ability to borrow money against unpaid invoices to improve cash flow. We on this side agree that invoice financing has its place, but it is not always the solution to the problem. When laying these regulations, Her Majesty’s Government have missed a great opportunity to sort out the wider issue, which the Minister touched on, around payment culture. The recent consultation on prompt payment received some very good responses on the wider issue of late payment which simply must be addressed soon. In excess of £2 billion a year is owed to SMEs in late payments—payments past the agreed invoice payment date. Does the Minister agree that this is a far larger and more easily solvable problem?

I was general secretary of the Labour Party before coming here. The Labour Party led on this by example and had 30-day payment terms. More widely, there is the absurdity of having a voluntary prompt payment code. Many large firms are signatories but there is no enforcement, so in real terms the code is worthless, especially as many companies have 60-day terms.

What if a company breaches those terms? Let us not forget that Carillion was a signatory but then went on and changed its payment terms to 120 days. Does the Minister agree with me that a sensible term for the code, even in its voluntary state, would be 30 days? Why has the prompt payment code not been made compulsory? Why has consideration not even been given to making it so? These reforms would help to solve the problem that IF looks to solve.

The correspondence with the Secondary Legislation Scrutiny Committee touched on the question of implementation dates. I note the Government’s response supporting the status quo, but do they still believe that there is any point in having common commencement dates? The CCDs of 1 October and 6 April each year are introduced to help businesses to plan for new regulations and increase awareness of the introduction of new or changed requirements, yet these regulations are to be introduced 21 days after they are passed. As the correspondence with the Secondary Legislation Scrutiny Committee reveals, it is not as if there has been a great rush to get these regulations in. As we can see from the Explanatory Memorandum, the first discussion paper was published in 2013, so I am sure that another few months’ delay to ensure better regulation would not have hurt.

I congratulate the Business, Energy and Industrial Strategy team on their detailed and helpful work on the impact assessment and the Explanatory Memorandum. Having said that, I think the committee has done a brilliant job of sorting out the documents before us and holding the Government to account for a certain amount of confusion. It might have taken time, but I believe it would have been better if the Government had issued new documentation following the consultation. As the Minister said, substantial amendments to the regulations were made, so was the impact assessment carried out after they were made or before, in 2013?

I turn to the substance of the regulation. Could the Minister satisfy me that no problems or unintended consequences of these regulations may arise in the accounting treatment following the introduction of these regulations? I am thinking particularly of when income from invoice financing is to be recognised in the accounts of a trading company when that is not done through factoring. If the Minister is unable to give me a direct answer today, I am more than happy for him to write to me.

Paragraph 7.4 of the Explanatory Memorandum states that this regulation will help diversify finance markets and encourage competition. Could the Minister expand a little on how exactly that will happen? The bit that confuses me is the exclusion of large companies from IF. Could the Minister explain why they have been excluded, especially as paragraph 10.7 of the Explanatory Memorandum, as he touched on earlier, outlines the problem with large commercial contracts, not large commercial companies or businesses per se? Paragraph 10.8 then outlines the solution of banning large companies from IF. This appears to be a completely different answer to a completely different question. Maybe the Minister could explain what the persuasive arguments by the legal profession were and how these led the Government to exclude large companies from IF.

In the Explanatory Memorandum, under the heading “Territorial Extent”, the paragraph following Paragraph 10.14 is labelled 10.1. I think that this is just a typographical mistake but it should be picked up on. The serious point here is that the regulations appear to interact with powers devolved to the Scottish Parliament. Is that right? If so, did the Government consider seeking a legislative consent Motion? If not, why not?

As I said at the start, the Opposition will not oppose these regulations on invoice financing, but it is a shame that the Government missed the opportunity to bring forward legislation to improve invoice payment practices within these regulations.