Employment and Trade Union Rights (Dismissal and Re-engagement) Bill

Geraint Davies Excerpts

Friday 22nd October 2021 Commons Chamber

[Laura Farris]

I do not think that my proposal is at odds with what the hon. Member suggests.

Just briefly, because I am coming to the end—[Hon. Members: “No.”] I would like to focus the remainder of my remarks on the detailed work that has gone into clause 1 and the extended duty to consult, which is proposed to go into the Trade Union and Labour Relations (Consolidation) Act as new section 187A. One of the things I think is most surprising about this, despite the fact that it is obviously very persuasive at first blush, is that it immediately takes the trade union, the employee and the employer into their very first meeting talking about fire and rehire. When I spoke to my constituents and the Unite representatives who were looking after them, the thing that had been the most stressful was that they had gone into these meetings and found that from the very start, dismissal was already being mentioned as an option. It was, “You will take this pay cut, otherwise we will sack you and get you back.” That seems to exacerbate the problem, rather than improve it.

The law in this area is not working. When I speak to employers about why they have been raising fire and rehire so early, they always cite section 188 consultation obligations, the “in good time” requirement under that, and the genuine fear that they will be hit with a punitive protective award if they have not put all their cards on the table at the start. A much more sensible route would be to take the heat out of these negotiations and make fire and rehire a last resort that only comes in when all other options have been explored.

That is why we should have specific language in a code of practice. It could say something like, “An employer who begins a section 188 consultation only after it has attempted to negotiate a change in terms and conditions consensually will be regarded as beginning that consultation in good time.” Alternatively, it could say, “Where an employer is attempting to negotiate new terms and conditions before any fire and rehire process, that amounts to special circumstances that rendered it reasonably practicable not to comply with section 188.”

[Geraint Davies]

The hon. Member is making some very interesting points. Given that she agrees with the spirit of the Bill, does she agree that fire and rehire should be a last resort? She is looking at this matter in detail. Does she agree that it would be better looked at in Committee? We appreciate that this area is complicated and she is a great expert in it, but would it not be better for her to be forensically evaluating this Bill with good time with my hon. Friend the Member for Brent North (Barry Gardiner) and others in Committee?

[Laura Farris]

I thank the hon. Gentleman for his intervention. I know that the hon. Member for Edinburgh West (Christine Jardine) wanted to intervene.

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[Kevin Hollinrake]

I defer to my hon. Friend, who knows far more about this issue than I ever would. The principle behind our discussion is making sure that, where the question is a business’s survival, it can get through a very difficult time. There is no doubt that last year many businesses and many sectors were in a situation where there were question marks about their very existence, so in those times they must have the opportunity to sit down with their workforce and restructure, where that is the only way forward.

[Geraint Davies]

The hon. Gentleman professes to speak for business. My background is in business. I mentioned earlier that the productivity rate in Germany had been twice that of here because employers are required not to fire and rehire people easily, so they train people. Does he also know that the Government-commissioned research by the Department for Business, Energy and Industrial Strategy shows that, in terms of productivity, the return to training in Britain is about 24% compared with only 6% in Germany? In other words, they have done much more training but our returns are much higher. Does he not agree that this sort of Bill, which puts pressure on employers to train and tool up their workers instead of just firing them when times are tough, is very important for the economy? Will he not join hands with us and take this forward to Committee?

[Kevin Hollinrake]

I think that there are two separate things entirely. Who would not agree with skilling up our workforce? Of course we need to skill up our workforce and good employers will do that to enhance productivity, particularly if we move to a higher-wage, higher-skilled economy. It is absolutely right that we should do that. However, the key question on whether the Bill should go forward to Committee is: is the Bill in any shape or form amendable so that it can do what the hon. Gentleman wants? [Interruption.] I accept that Opposition Members may feel that it is, but there are cogent arguments from Government Members that it is not and that there are better ways to do this.

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[Richard Fuller]

That is an interesting point. Unfortunately, I am not a member of the Government. The hon. Gentleman probably wants to direct that question to those on the Front Bench. I am familiar with Matthew Taylor, who, apparently, is back in the news this week with a different hat on telling the Government what they should or should not do, and I am not sure whether I agree with him in that particular case.

The hon. Member for Brent North also said that the Bill was about better regulation, and that perhaps gets to the nub of the difference of approach between those on the Labour Benches and those on the Government side of the House. Our approach is not about making better regulation, but about making better business. We understand that in doing that, Government and others can take a variety of tactics and approaches to achieve a shared objective.

Let me point Members to my entry in the Register of Members’ Financial Interests, because I want to refer to a couple of pertinent examples from last year. This debate largely relates to an exceptional time and an exceptional practice, both of which remain exceptionally rare. For those who have quoted many statistics, let me just add a comment from the Chartered Institute of Personnel and Development. It said that the

“use of ‘fire and rehire’ remains low”

despite the “upheaval of Covid.” It was covid that created those exceptional issues for people. The part that was exceptional and that differentiated companies’ response from the one during a different time of distress, the 2007-08 financial crisis, was that the Government themselves had stopped commerce. This was not just a matter of overcoming financial considerations—the shortage of access to capital to support a business or a downturn in demand in the economy—but a direct intervention of the state, both in this country and in Europe and across the world, which said, “No, you cannot do business”. When we frame legislation, it is important to understand that, if the context for that legislation is primarily driven by such an exceptional event, we are wise to be very cautious indeed about what we put on the statute book for fear that it will have uses in less exceptional times that perhaps we cannot foresee today. That is one of the primary reasons why I will not be supporting the Bill in a vote later today.

Let me reflect on what was on the minds of companies at that time. My hon. Friend the Member for Thirsk and Malton (Kevin Hollinrake) talked a little bit about his broad experience, but I want to talk specifically about what was going on this time last year. Before coming to Parliament, my career was substantially in venture businesses. The businesses to which I still have relations would be covered by the provisions of this Bill. They are largely in the categories of businesses larger than microbusinesses, but they are all businesses for which the availability of cash and the support of capital, both shareholder capital and of loans, are always treated very seriously and quite tightly to achieve growth.

Growth is those companies’ main objective. They do not have a cushion of resources to fall back on, so when the exceptional events of covid and the closedown of the economy occurred, the amount of pressure on their boards and senior executives was beyond exceptional. There was the responsibility to understand where on earth money was going to come from to support ongoing operations. There was their duty of responsibility to make sure that they were not trading fraudulently because of insolvency concerns about the business. There was a desperate search for loans, and an approach to shareholders to gain additional liquidity through additional investment. Many senior executives voluntarily cut—and in at least one instance eliminated—their pay during that period. There was a tremendous focus on employees, and primarily on employee safety.

Let us all remember that the experience of covid was not a shared common experience for everyone in the country. There are those of us in the country, such as Members of Parliament, who were facilitated to continue to take 100% of our pay, to have 100% certainty of employment, and to have the opportunity to work from the safety of our own home, but there were many others who were facing: cuts in their pay, a 100% certainty of the loss of their business and the requirement that, if they wanted to stay in employment, they had to go to work. For any Member to say that senior executives and company boards were not intently focused on ensuring the safety and security of their employees does a gross disservice to what companies were going through.

Boards and senior executives were substantially challenged to make changes. In the process of looking at all the alternatives that could maintain the survival of the company, they would have due regard to the law at the time. As my hon. Friend the Member for Newbury stated, one of the issues with the existing legislation is that companies will defer putting all their cards on the table, including the option of fire and rehire if that is one of their considerations. Perhaps we can make some change in that regard that would be helpful for companies and employees.

Companies would also have due regard to maintaining the solvency of their business. To do that, consideration has to be given to what a company will do to manage its costs in the year ahead. If it is looking to access capital, loans or additional equity, questions will be asked by the banks, creditors and shareholders about what it is doing to manage their future costs. It would be a deterrent to gaining the investment and support needed to maintain the business if it was unable to outline what angles and opportunities it was investigating to reduce costs.

For many of the executives in business with which I have worked, consideration of employees is front and centre in their mind. It is exceptionally difficult for them to balance in their own heads the idea that, “I know I need this additional capital,” with, “I want to make sure I can protect the employees and the skills that I have within my workforce.” In my experience, most people involved in business who are entrusted with authority would undertake measures covered by the Bill only as a last resort, if ever.

[Geraint Davies]

The problem is that the hon. Gentleman is conflating the extraordinary situation of the pandemic, when the Government, to their credit, intervened with furlough, loans and other measures, with a normal situation when a business needs to adjust to economic pressure. That is what we are talking about today—a Bill that, to a certain extent, limits fire and rehire so that it is not the first but the last resort. I feel that he should support it.

[Richard Fuller]

I understand where the hon. Gentleman is coming from, but I do not think the facts of history indicate that what he suggests is the right approach. The truth is that throughout the period of the last Labour Government it was not seen fit to bring forward such legislation. As I mentioned earlier, there were no calls for it when we went through a severe financial crisis, although there was widespread fire and rehire. It is precisely because there was an exceptional event last year that I am conflating that with this legislation. In my view, the Bill has been stimulated by that experience but will sit on the statute book for the future of more regular business, though I am not sure what that will be.

Furthermore, there is a little confusion about the intent of the Bill, which perhaps the hon. Member for Brent North can help to clarify now he is back in his place. Many of us have seen Labour MPs—socialists—campaigning to outlaw fire and rehire, and one would anticipate that many of them have turned up today to vote to do that, yet we heard from the Bill’s sponsor that it does not do that. It got so confusing that the shadow Front-Bench spokesman, the hon. Member for Bradford East, urged hon. Members to “support fire and rehire”. Between those on the Opposition Benches who say that they want to ban it, the promoter of the Bill who says that his Bill does not ban it, and the shadow Front-Bench spokesman who wants us to do more of it, I wonder whether they know what indeed they are doing.

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[Geraint Davies]

Will the Minister give way?

[Paul Scully]

I will not for a minute, because I want to make some progress.

It is right and proper, however, that we consider the evidence before we act, rather than just jabbing our finger, so that we avoid any course of action that runs the risk of doing more harm than good. I assure the House that the Government are taking the issue seriously, considering the evidence available from different perspectives and then taking appropriate and proportionate action.

It has been an extraordinary and difficult 19 months for all of us. The impact of the covid-19 pandemic on the whole country has been profound. Millions of people were on the precipice of losing their jobs, livelihoods and homes, but the forecast was wrong and the unemployment rate in the UK is at less than 5% and falling. That is 2 million lower than some of the forecasts and it is lower than France, the United States of America, Canada, Italy and Spain. As we heard from my hon. Friend the Member for Broadland (Jerome Mayhew), the high levels of youth unemployment in Spain and Ireland compared with the UK show that we are getting things right here.

We are making sure that bouncing back better means growing our economy, creating opportunities and creating jobs. I know how hard it has been in the past couple of years, despite the fact that we are now on our way to recovery, especially for the many businesses that have had to shut their doors and take a significant economic hit to protect the public’s health.