Employment Rights Bill

Baroness Stowell of Beeston Excerpts

Committee stage
Wednesday 21st May 2025 Lords Chamber

[Baroness Garden of Frognal (LD)]

My Lords, I added my name to this amendment, which was tabled by the noble Baroness, Lady Wolf, but has been very ably spoken to by the noble Lord, Lord Aberdare. He and I tend to find ourselves in the same Lobbies for just about everything to do with apprenticeships.

We only very recently debated a Bill abolishing the Institute for Apprenticeships and Technical Education so that this amazing new body Skills England could emerge. We still know remarkably little about Skills England. It has a proud remit, but we do not yet know what it is going to perform.

As the noble Lord, Lord Aberdare, set out, this amendment is really important because there is a real problem in attracting youngsters into apprenticeships. An apprenticeship was always something for somebody starting out in a career, but the vagaries of the apprenticeship levy mean that they are increasingly being given to people mid-career, for advancing their careers. Unless there is more incentive to enable young people to access the workforce, we will be in an even more dire state. We have nearly a million NEETs now—young people not in education, employment or training—and, if they cannot access apprenticeships, that figure is only set to go up.

We know that, in other European countries, apprentices have a specific distinctive legal status, but they do not in the UK; they are simply employees who have received an apprenticeship learning contract. The Bill will apply to them all, whether they are an 18 year-old or a 50 year-old. This cannot be desirable. I beg the Government to look again at this, because it is hugely important that we do not deter employers from taking on youngsters.

I went with the social mobility committee up to Blackpool and The Fylde College recently, and we were talking to employers there who were already bemoaning the fact that it was incredibly difficult for them to take on apprentices. There was so much bureaucracy and burdensome stuff that they had to follow. They were all saying that, if this came in and if the apprentices had full employment rights from day 1, that would deter them even more. That really cannot be right, and I beg the Minister to listen to this amendment.

[Baroness Stowell of Beeston (Con)]

My Lords, I briefly add my support for Amendment 102 and will pick up on the comments of the noble Baroness, Lady Garden, on her committee’s recent visit to the Blackpool and The Fylde further education college. I declare an interest as a commissioner at the Social Mobility Commission, the chair of which is also the principal of the FE college that the committee went to visit. From the perspective of social mobility and the importance of apprenticeships, any measure that would deter the creation of quality apprenticeships that are successful is a bad one, and I therefore support this amendment.

[Lord Londesborough (CB)]

My Lords, I rise to speak to Amendment 102 in the name of my noble friend Lady Wolf of Dulwich and pitched so perfectly by my other noble friend Lord Aberdare—I realise that that sounds as though I only have two friends in this House, which I hope is not the case.

This amendment addresses a consequence of the Bill that will significantly reduce the willingness of employers to hire young people as apprentices—a consequence that I am sure was neither anticipated nor desired by the Government or indeed the Bill’s drafters, which is strange because this Government are acutely aware of the skills shortages facing this country and the need to address them. It was notable that, in introducing the Government’s new immigration strategy last week, both the Prime Minister and the Home Secretary emphasised the need to invest in skills so that the immigration system

“no longer ignores the millions of people who want the opportunity to train and contribute”.

They also highlighted that, in sectors like engineering, apprenticeships have “almost halved” in recent years.

We only very recently debated the Bill, now an Act, that abolishes the Institute for Apprenticeships and Technical Education. That change was not introduced because the Government are against apprenticeships; on the contrary, this is part of a reform that is creating a new integrated strategic body, Skills England, as we have heard, to meet, in its own words,

“the skills needs of the next decade across all regions”,

and apprenticeships are a central part of Skills England’s brief.

Young people do not need persuading of the value of apprenticeships. On the contrary, there is huge excess demand, as we have heard. Of those 17 to 18 year-olds who make a serious effort to find an apprenticeship, only 25% succeed. Young people typically start off on what are called intermediate apprenticeships, but these are in decline too, in absolute numbers and proportionally —crowded out by so-called higher apprenticeships, which are equivalent to university qualifications.

Today, more and more of our apprentices are older. Around half of apprenticeship starts now involve people over the age of 25. Critically, large numbers of older apprentices were already working for their employer before they became an apprentice. This is especially true of large employers who pay the apprenticeship levy, who account for a growing proportion of apprenticeships. So, if the Government are going to achieve their aims, we need to have far more openings for young apprentices —but there is a serious danger that the Bill will make large employers even more inclined to give apprenticeships to existing employees, with whose employment they take no risks, rather than hiring new young apprentices.

What about the young people who make up the growing number of NEETs? SMEs are the main employers of young apprentices and absolutely central to the economies of less-advantaged areas. But their apprenticeship recruitment has been plummeting. SME business owners complain that apprenticeships, as we have heard, have become more and more burdensome and bureaucratic, and just too expensive. So if, on top of this, young apprentices are entitled to full employee rights from day 1, many more employers, especially SMEs, will surely just walk away.

Taking on an untested person is always risky, and this Bill will make it much more so. In many other European countries, apprentices have a specific distinctive legal status. In the UK, they do not; they are simply any employees who have received an apprenticeship training contract. This Bill’s provisions will apply to them all, whether they are an 18 year-old training as an electrician or a 50 year-old on a leadership apprenticeship. These are the dangers of a one-size-fits-all approach, as I have already pointed out numerous times in Committee.

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[The Earl of Erroll (CB)]

Very briefly, because we are talking about the time periods here, you have to be very careful because accrued holiday goes into that, and if you do not give people notice before the holiday is up, you cannot get rid of them. So be careful: it should be three months or less, and actually you have to knock off another week or so. This is from experience.

The other thing is the headmaster issue. I know one small school which had terrible trouble because the headmaster was incompetent. He knew it, so he got depressed and went on permanent sick leave, and of course the school was then saddled with the costs. There are a lot of problems such as that. It would be nice to clean them up at the same time if we could, but I do not think it will happen in this Bill.

[Baroness Stowell of Beeston (Con)]

My Lords, I support the amendments in this group and endorse most of the arguments that have already been advanced. I will focus just briefly on tech scale-ups.

Noble Lords will, I hope, remember that the Communications and Digital Select Committee published a report just a few months ago on AI and Creative Technology Scaleups. These businesses are incredibly important to our economic growth. They represent the innovation that comes out of our universities and the talent that exists in this country, but they need a huge amount of support to get from being start-ups to scale-ups. However, if they are successful, the return that they then deliver to our economy is huge.

Our inquiry found that the UK is, in effect, an incubator economy. What we are seeing now is that increasingly the kinds of businesses that have the potential to turn into unicorns, or indeed become unicorns, are galloping away. They are doing so because of many things. Sometimes it is about access to capital growth and to highly competitive workforces. But one of the biggest challenges that we face is that our regime, whether it is regulatory or investment, is not supporting risk-taking. As my noble friend Lady Noakes said a moment ago, the measures in the Bill about day-one rights on unfair dismissal, along with many other things, are undermining risk takers.

As part of our inquiry—before the Bill was published—witnesses told us, in the context of hiring, that the costs of hiring and firing are already much higher in the UK than anywhere else, which is putting UK businesses at a disadvantage. In the context of the Bill and the day-one rights around unfair dismissal, the Startup Coalition, which represents the start-ups, talked in its briefing note about the chilling effect that these day-one rights around hiring and firing would have on start-ups, seriously undermining their potential for growth. TechUK, which represents tech businesses of all sizes, has raised a lot of concerns about some of these day-one rights, but in the context of unfair dismissal, one of its concerns, which I do not think we have heard much about so far, is the risk of fraudulent claims.

In the Government’s response to our report—while I am on my feet, I add a bit of advertising: the debate on the report is on Friday 13 June, so I urge any noble Lords who are interested in this to sign up and contribute—they referred a lot to their AI action plan and the forthcoming industrial strategy, saying that jobs will be “at the heart” of that strategy. If that is the case, I urge the Minister to think again in the context of what I have just argued. If jobs are to be at the heart of that strategy, and the Government are as keen to support tech scale-ups as they have declared themselves to be and have put this part of the economy centre stage in all their growth plans, but these kinds of measures are making it impossible or so difficult for these businesses to be willing to take the risks to hire in the way that they need to in order to scale, then the Government are introducing measures which are self-defeating and which will undermine their own objectives.

[Lord Fuller (Con)]

My Lords, I shall speak to Amendments 104, 105, 106 and 107, but particularly Amendments 107A and 108, relating to day-one rights.

Getting into work helps people make the best of their lives and reach their full potential. It is good for them and their families, and, of course, employment helps businesses and, through the taxes that everybody pays, helps sustain our state. You would expect that it was a core role of the state to incentivise the creation of jobs in pursuance of economic growth, personal fulfilment and a reduction in the costs of worklessness. It sounds so obvious, but the Government need to be reminded of those simple truths, because the facts are that the well-meaning and superficially attractive suggestion that employees should have full rights from day one is full of perverse consequences that will reduce the appetite to take on staff and will particularly benight those with few qualifications and limited experience. Furthermore, it does not reflect the way in which the economy is changing and the world of work is altering, as people choose to work in different ways.

Taking on new employees is not something that organisations do lightly. For the most part, there is an application and interview process, and we have heard about this from other noble Lords. For most employees, applying for and getting a new job is a well-trodden path, as someone builds a career, gains experience and seeks promotion. But that is not how it is for the part of the workforce that does not have formal qualifications. We have heard about ex-prisoners and people without experience or a strong track record in a particular field. People get on the ladder only when an employer takes a chance on them. The muddled thinking behind this Bill will result in the perverse outcome of increasing not only the cost of taking somebody on but the risk of getting it wrong. The consequence will be to make a business think twice before taking a chance on the person with limited experience, people at the beginning of their career, or those with an impaired employment record. These people need the greatest help.

It is not just the youngsters who may suffer from these well-meaning but counterproductive proposals. Many people prefer a portfolio of part-time jobs nowadays, because it suits their lifestyle. The facts are that the relationship between casual, agency and temporary work in the UK suits those engaged in it for a variety of reasons. The temporary agency, Adecco, tells me in a briefing that 79% of UK temporary and agency workers rate the flexibility it gives them most highly, and two-thirds say that temporary or part-time work helps their work-life balance.

Because much of the temporary work is variable and unpredictable, it is incompatible with some of those other day-one rights, such as the offering of guaranteed hours over a reference period. Some of the employment that might fall under this ambit is weather-dependent work—there is not much call for an ice-cream seller on a wet bank holiday weekend in a seaside town, for example. Seasonal work—harvesting, for example—often depends on the weather. It has been very dry recently, and harvest is going to be earlier this year. If you think about the reference period, there is more likely to be work up until 30 June, rather than in the normal quarter, which would have been the successive quarter reference period. There is casual work, such as waiting at a wedding or manning the turnstiles at a stadium concert or event, for example. All of these are temporary things, and it is going to be very difficult on day one for the employer to commit to some of these rights, because it is out of the employer’s control.

There is another perverse consequence that relates to the wider umbrella of agency and temporary work, such as supply teachers and supply nurses—I notice that the noble Baroness who was the chief nurse is no longer in her place—and locum and sickness cover, where the employee determines their availability, not the employer, as it suits them. We see that some of these rights are actually going to put the employee in a worse situation, because they are going to lose their bargaining power.

I will move on, because I am conscious of the time. All I will say is that codifying many of these things will make it harder for people to take advantage of temporary opportunities and will counterintuitively reduce their bargaining power, removing the labour market liquidity that makes the economy work for all parties, and particularly the taxpayer.

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The noble Baroness, Lady Neville-Rolfe, asked how this fitted in with our plans for economic growth. I say to the noble Baroness that we of course take that issue seriously. The UK is now the fastest-growing economy in the G7. Up against the backdrop of global uncertainty and the very poor economic inheritance from the previous Government, we are making the right choices in the national interest. Since the election, we have already made four interest-rate cuts, signed three international deals to boost trade, saved British Steel and given a pay rise to millions by increasing the minimum wage. We are putting more pounds in people’s pockets and living standards are growing at their fastest rate for two years.

[Baroness Stowell of Beeston (Con)]

Forgive me if I am pre-empting the Minister, but given that she has just responded to my noble friend on the question of economic growth, what is her reply to the issues I raised about the specifics in the context of tech scale-ups, which are a priority for the Government’s growth agenda? What is the impact of these measures on that particular industry?