Employment Rights Bill

Baroness Stowell of Beeston Excerpts

Committee stage
Thursday 8th May 2025 Lords Chamber

[Lord Londesborough (CB)]

My Lords, I will speak to Amendment 63. I agree that the impact of Clauses 1 to 8 will be especially felt by these three sectors: hospitality, retail and social care. But, to be frank, I would not stop there; I advocate expanding this impact assessment, not only to small businesses and micro-businesses—noble Lords would expect me to say that—but to all key sectors in the economy. There will be huge employment variations sector by sector, and they need to be analysed and understood. As we keep hearing, one size does not fit all—although the Bill has a different view on that—and we have the issue of “mind the gap”.

Two other industries that certainly deserve such assessments are the creative industries, which we will debate on another day, and the gig economy. Some very disturbing numbers are already coming out of membership surveys from bodies such as the Federation of Small Businesses and the Institute of Chartered Accountants. I will share two bits of data from the ICAEW’s latest quarterly business survey for the first quarter of this year. It says that 53% of its members expect that the Bill will

“reduce their plans to hire permanent staff”,

and that 40% anticipate greater use of outsourcing because of the Bill—that is a very significant number.

What does this mean? It means—it is already happening—that employees will be coming off payroll and going into freelance and self-employed roles. We have an amendment coming up in many days’ time, or probably weeks; I will not read out the names of my noble friends who are behind it, but it is Cross-Bench and Liberal Democrat-sponsored and relates to the establishment of a freelance commissioner office. I think the Government may have very little choice on this, because the demands for the services of that office are going to go up exponentially, partly because of this Bill and also because of the national insurance contributions Bill. I will not repeat all those arguments.

I come to the second unforeseen consequence—although, frankly, these are not unforeseen, are they? They are foreseen. We can actually say with some certainty that the Government are encouraging the offshoring of jobs from the UK. This trend has been going on for decades, but is it really the objective of the Government, particularly for lower-paid and entry-level roles, to see a percentage of those jobs going off to countries such as India, Vietnam, the Philippines, Romania or Moldova? I am not against offshoring, but I think you have to be very careful about being seen to be encouraging it, and I believe the Bill is guilty of that.

On the assessment, which we hope will happen, the area that should be looked at in greatest detail is the impact on part-time jobs. We have heard already about the young graduates and students, but I will speak up also for older workers. Those of us here who sit on the Economic Affairs Committee—I see the noble Lord, Lord Davies, here—will be aware that we are conducting an inquiry on the economics of an ageing society. If the Government are to achieve their noble objective of raising the economic activity rate from 75% to 80% across all age groups, they will have to tackle the 50 to 70 year-old cohort.

In order to get people back into work, not just those who took premature retirement but those who have been on benefits for a long time, we will have to be far more flexible about creating part-time work, and I am afraid that the Bill is likely to deter the creation of part-time roles. So that is another area that I believe the impact assessment should be looking at, which is not just by sector but by type of job.

I am told by my friends in the recruitment industry, if I can call them that, that there is already a shift in hiring from permanent to interim, and that trend started at the beginning of this year and is accelerating. Again, national insurance contributions have pushed employment in that direction and the Bill threatens to do the same.

My final point, talking about assessments, is that HMRC may well want to conduct one to discover that its projected national insurance contribution tax revenues will, as a result of the Bill, take a significant hit as employees start being taken off payroll and moved into self-employed, part-time or even offshored roles.

[Baroness Stowell of Beeston (Con)]

Perhaps I might intervene briefly on this group. I support Amendment 63 but, like the noble Lord, Lord Londesborough, I wonder whether it is too modest in scope. As I said when I spoke on the last day in Committee, I am sympathetic to the kinds of effects that zero-hours contracts or some of the different kinds of practices that we see now have on employees in these businesses, which are often at the lower end of the pay scale.

However, I am very struck, by listening not just to this debate but to the debates on the various different things that we have been discussing this afternoon, that what we do not seem to be taking account of—or rather, to be more specific, what the Government do not seem to have taken account of in bringing forward this legislation—is that a lot of the practices that they are trying to remove or mitigate are the consequence of other things that have been introduced in the past which have been well intentioned in support of low-paid workers but are now creating other things. For instance, although it is going back some time now and various other things have happened since, I think about the arrival of tax credits when Gordon Brown was Chancellor. That led to people wanting to reduce their contracted hours because of the impact on their various benefits.

So when I hear people say that some of these measures—or, rather, the removal of some of these practices and various other things in the Bill—start to disincentivise people either being offered more hours or whatever, I worry that, given the way in which the Bill has been introduced and what feels like inadequate assessment through the proper stages—Green Paper, and all that sort of thing—we are creating yet more problems, which will then lead to the need for yet more legislation, which will never get to the heart of what we are trying to do here, which is to create an employment economy that is fair for employees and people do not feel that they are being exploited but have the flexibility that they need, and where employers, too, have the freedom and independence that they absolutely need to be able to employ workers and grow their businesses to contribute to the fundamental agenda, which is a growing economy that is fair to everybody concerned.

[Lord Fox (LD)]

My Lords, this is another one of those divided-off groups. I am going to speak to impact assessments and reserve what I say on tribunals for the next group. There is a danger when talking about the existence of and the need for impact assessments that we start providing our own impact assessments. I am afraid that many of your Lordships fell into that trap. I will try to avoid it, so I will not be commenting on what should be in an impact assessment; I will be commenting on why we need improved impact assessments. Some of the Government’s amendments have already been debated. I was not able to be here during that part of the process, but, on reading the debate, I saw that it further illustrated that, with each layer of new amendments, changes are coming to the Bill and complications and reflections are being added.

The noble Lord, Lord Hunt, before he gave us his impact assessment, made I think his most important point, which was to bring up the findings of the RPC on the existing impact assessment. That is before all the changes that have come and before the Bill changed substantially between the Commons and your Lordships’ House, and therefore, unscrutinised to this point. I am very much in the camp of the noble Lord, Lord Londesborough: if we are going to redo an impact assessment, we should do it properly. We should go back and produce one that is meaningful, that the RPC can endorse and that we can use meaningfully in the next stages of this Bill.

I am not sure how many of your Lordships worked on the then Professional Qualifications Bill. I suspect that the noble Baroness, Lady Neville-Rolfe, may at least be one. Sometimes the then public procurement Bill is used as an example of Bills that come half-baked—or, in that case, not even in the cooker—but actually the best example is the Professional Qualifications Bill. That Bill differed from this one in that it started in your Lordships’ House, but it came to your Lordships’ House full of things that needed to change, full of drafting points and full of extensions and amendments, and the noble Lord, Lord Grimstone, who was the Minister, stood where the Minister is today and said, when we came to the end of Committee, “Well, my Lords, it is clear that we have to take this Bill on a holiday”. And that is what he did. He took it away for four months and came back with a Bill that was properly drafted. The “i”s had been dotted and the “t”s crossed and we were able to make a reasonable piece of legislation to pass to the Commons for its work.

We have some time. This is a flagship Bill. It had to be introduced within 100 days because that is what the Government told the world. I understand that. But it is very important that we get this right. The Minister should start thinking about vacation plans for the Bill between Committee and Report, so that things such as the impact assessment can be delivered to your Lordships’ House. Those of us who want the Bill to succeed will then be sure that it has a chance to succeed.