Employment Rights Bill

Greg Smith Excerpts

Report stage
Wednesday 12th March 2025 Commons Chamber

[Madam Deputy Speaker (Ms Nusrat Ghani)]

I call the shadow Minister.

[Greg Smith (Mid Buckinghamshire) (Con)]

Ahead of getting into the detail of the many amendments before us, which the Minister rattled through in just 10 minutes, let me say that overnight we learned that the Government are moving the responsibilities of one quango to another. They are moving the responsibilities of the Payment Systems Regulator to the Financial Conduct Authority, putting one quango into another. Conveniently, they already share a building. The Prime Minister has hailed that as “the latest step” in the Government’s attempt to “kick-start economic growth”, though the amendments we are discussing do the very opposite.

The Chancellor said:

“The regulatory system has become burdensome to the point of choking off innovation, investment and growth”,

but that is precisely what the Bill does. I do not know how the Government can say that with a straight face when, as we stand here today, blocking regulatory burdens cost every business in the land—small, medium or large—£5 billion.

[Wendy Morton (Aldridge-Brownhills) (Con)]

In the Chamber yesterday, it was quite clear that the Minister and his team did not fully understand the definition of a small business. I am sure that my hon. Friend the shadow Minister does understand it. Does he agree that that is fundamental to understanding why the balance of this legislation is wrong?

[Greg Smith]

My right hon. Friend makes a superb point, as she always does. Every single small business that I have talked to in my constituency is very concerned about the measures in this—

[Justin Madders]

On that point, will the shadow Minister give way?

[Greg Smith]

I will if, 24 hours on, he can name a small business that supports the Bill.

[Justin Madders]

I am asking the shadow Minister to give way, but the right hon. Member for Aldridge-Brownhills (Wendy Morton) could have intervened on me during my speech. One of the reasons why there is so much confusion about the definition of a small business is that the shadow Minister moved an amendment in Committee that said that a small business

“means an organisation or person employing 500 or fewer employees”.––[Official Report, Employment Rights Public Bill Committee, 3 December 2024; c. 177.]

So if there is any confusion, it is on the Conservative Benches.

[Greg Smith]

Twenty-four hours later, the Minister still cannot name a small business that supports the Bill. That shows how out of their depth this trade union Government are when it comes to supporting businesses in this land. In the words of the Chancellor, this Bill is

“choking off innovation, investment and growth.”

To pretend otherwise would be taking the public for fools.

On new clauses 89 and 90, almost everything this Government have done is contradictory to the objective of growth, if that remains their objective this week. Whether it is the national insurance jobs tax, the changes to business rates or this Bill, everything they do seemingly goes against growing the economy. It is little surprise that, under Labour, the economy is flatlining.

The Prime Minister said earlier this year that everything the Government do will be subject to a “growth test”. However, the details of that test have been sparse, at best—so sparse, in fact, that people may well think it does not exist.

[Mike Martin (Tunbridge Wells) (LD)]

Could the shadow Minister describe Liz Truss’s growth test?

[Greg Smith]

Well, cut red tape for a start. We see from Lib Dem Members that “The Orange Book” tradition of the Liberal Democrats is well and truly dead; they now position themselves firmly to the left of the Labour party.

There is no greater evidence that the growth test does not exist than the Bill, because if such a test did exist, this Bill would fall at the first hurdle, but today I come with good news: I have two amendments that the Government can back this afternoon to help them to grow the economy. Those amendments are, of course, new clause 89 and new clause 90.

New clause 89 would require the certification officer to advance the objective of the international competitiveness of the economy, and new clause 90 would require the Secretary of State, who is again not in his place, to have regard to international competitiveness when passing regulations under part 4 of the Bill concerning the trade unions. The Government have been asking regulators for ideas to boost growth—it is a contradiction in terms to ask the regulator to boost growth—but we are happy to help them with their quest. The Government should be able to support these amendments. If they cannot, it shows that they are not serious about economic growth and, more tellingly, that they do not intend to use the powers in part 4 of the Bill to achieve growth or international economic competitiveness, because they do not intend to exercise them in a way that is compatible with those objectives.

New clause 88 on trade union political funds will, I am sure, get the Government a little bit hot under the collar. This is a “Labour party first, country second” Government. Nowhere is that clearer than in the changes that the Government are making to the political fund through the Bill. Let us be in no doubt that the changes have one simple purpose: to bolster the coffers of the Labour party.

Clause 52 will mean that members of trade unions will automatically contribute to their trade union’s political fund without being asked about it first. Members will have to opt out, rather than opt in, as they do at present. [Interruption.] Did someone want to try to defend that? No? Okay. If trade union subscriptions are to be used for party political campaigning, it should be a conscious decision of the trade union member to endorse such campaigning.

[Sir Ashley Fox (Bridgwater) (Con)]

The shadow Minister may recall that in Committee, every single Labour member of the Committee declared sponsorship by the trade union movement. Does he agree with me that this clause is simply payback for the trade union movement, after its financial support for the Labour party?

[Greg Smith]

My hon. Friend served assiduously on the Committee, raising many good points, including the one that he just made, which I absolutely agree with. The public will be asking serious questions about this.

[Gareth Snell (Stoke-on-Trent Central) (Lab/Co-op)]

rose—

[Greg Smith]

If the hon. Gentleman wants to try to defend that, I will give him the opportunity.

[Gareth Snell]

I am happy to declare my interest as a member of three trade unions, but I got less from them than the shadow Minister got from a small business—I think his declaration is £12,500. Does he feel the need to declare that, given that he is now making a case against legislation that would impact that company?

--- Later in debate ---

[Greg Smith]

I am making a point about the trade union movement, which I have never been a part of, and certainly never received any money from. I am happy for the hon. Gentleman to look at all my declarations in the Register of Members’ Financial Interests.

[Gareth Snell]

On a point of order, Madam Deputy Speaker.

--- Later in debate ---

[Greg Smith]

For the avoidance of all doubt and in all transparency, I declare all my entries in the Register of Members’ Financial Interests for all to look at. They are all there for anybody to see.

[Sir Julian Lewis (New Forest East) (Con)]

This argument about opting in and opting out of trade union levies goes back to at least the 1970s—probably beyond—when I remember arguing about it as an undergraduate. If there are to be levies that people have to opt out of, a defensible case can be made for them provided that the process of opting out is easy and advertised to every member. Does my hon. Friend know whether the Government propose to institute mechanisms to make it known to every member how easily they can opt out?

[Greg Smith]

My right hon. Friend makes an incredibly important point. If we look at the detail of this Bill, it is very clear and obvious that the Government are trying to make it as difficult as possible for people to opt out of the trade union political fund. That is the very point of them changing this legislation.

[Mrs Sarah Russell (Congleton) (Lab)]

Will the shadow Minister give way?

[Greg Smith]

I will make a bit of progress, then I will come to the hon. Lady.

An opt-in is the default under consumer protection law and information law. Combined with the 10-year reminder change, it is highly likely that many trade union members will not be aware that their subscriptions are being used in this way or that they are eligible to save money on their trade union fees by not being a member of the political fund. Despite all the talk of supporting working people, it is clear that that concern simply does not apply when working people’s money is being taken to fund the Labour party and other political causes. We have tabled amendment 291 because we believe fundamentally that people should consent explicitly to what is, in effect, a subscription trap. Amendment 291 would simply maintain the status quo; it is the right thing to do.

[Mrs Russell]

I draw attention to my entries in the Register of Members’ Financial Interests: I am a member of Community and the Union of Shop, Distributive and Allied Workers. Can the hon. Gentleman tell us how many times such a ballot has actually resulted in the closure of a political fund? I think he will find that the answer is none.

[Greg Smith]

The hon. Lady is putting up a smoke-and-mirrors argument to try to cover the fact that the Government are changing the status quo from an opt-in system to an opt-out system. To me, it is just straightforward common sense that people would expect to have to opt in rather than, in this particularly egregious case, being casually reminded every 10 years that they could save a bit of money by opting out of a cause that they perhaps did not even agree with in the first place.

In fact, the Secretary of State for Business and Trade, the right hon. Member for Stalybridge and Hyde (Jonathan Reynolds), pledged to end auto-renewal subscriptions. When the Conservatives were in government, we passed the Digital Markets, Competition and Consumers Act 2024, which contained two significant proposals on subscription contracts that are notable here. One of those was reminder notices. Businesses need to provide notices to consumers to remind them that their subscription contract will renew and payment will be due unless the consumer cancels. The second proposal was to allow consumers to be able to exit a subscription contract in a straightforward, cost-effective and timely way. Businesses need to ensure that the process for terminating is not unduly onerous and that consumers can signal their intent to end the contract through a single communication.

The Labour party, which was then in opposition, supported those aims—in fact, the Bill did not go far enough for Labour at the time. On Report, the hon. Member for Pontypridd (Alex Davies-Jones) tabled new clause 29, which the Labour party voted to add to the Bill. The new clause had a two-pronged approach. It required traders to ask consumers whether they wished to opt into subscriptions renewing automatically either

“after a period of six months and every six months thereafter, or…if the period between the consumer being charged for the first and second time is longer than six months, each time payment is due.”

The second aim of the new clause, which the Labour party used to support, would have required that if the consumer did not opt into the arrangement described, the trader had to

“provide a date by which the consumer must notify the trader of the consumer’s intention to renew the contract, which must be no earlier than 28 days before the renewal date.”

If the consumer did not provide a notification, the subscription contract could not renew.

Where am I going with this? [Interruption.] Government Members are chuntering too early, because there has been a considerable shift in the Labour party’s policy position on subscription traps. It seems to believe that consumers should be given every possible opportunity to cancel subscription contracts with businesses, but that it should be as hard as possible to cancel a subscription to the trade union political fund. Under amendment 292 and new clause 88, trade union members would have the same rights, pushed for by Labour, as other individuals with a subscription.

New schedule 2 could be used to give sweeping powers to Labour’s trade union paymasters, as the Secretary of State could reduce the threshold for trade union recognition to as little as 2% of the workforce. Trade unions could easily be imposed on workplaces across the country, with small employers being particularly vulnerable. In a workplace of 200 workers, fewer than five of them would be required for workplace recognition. Paired with the other measures in this Bill, that will strike fear into business owners across Britain, who could now be forced to deal with all-powerful trade unions as part of Labour’s return to the 1970s. The way in which Labour has gone about this is just another example of the shoddy nature of this Bill and of Labour’s approach to workplace regulations. The Attorney General has said that

“excessive reliance on delegated powers, Henry VIII clauses, or skeleton legislation, upsets the proper balance between Parliament and the executive. This not only strikes at the rule of law values I have already outlined,”—

I am quoting him—

“but also at the cardinal principles of accessibility and legal certainty.”

On facility time, amendments 293 and 295 would remove clause 54, “Facilities provided to trade union officials and learning representatives”, and clause 55, “Facilities for equality representatives”. They would remove the requirement to provide reasonable time off for facility time, the creation of facility time for equality representatives and clauses that will reduce transparency requirements over facility time, respectively. Together with amendment 296, they would prevent facility time for equality representatives from being provided unless the relevant public sector organisation is meeting its statutory targets for performance. Trade union facility time already costs the Government nearly £100 million a year. Under the last Labour Government, the civil service spent 0.26% of its annual pay bill on facility time, compared with 0.04% in the private sector. Under the last Conservative Government, in 2022-23, the average for the civil service was 0.05%.

Labour councils are still the worst culprit. The transparency data collected by the Government in ’22-23 shows that Transport for London under the Mayor of London, Sadiq Khan, has 881 full-time equivalent union officials on the books, costing £8 million a year. Bankrupt, Labour-run Birmingham city council has 30 full-time equivalent union officials on its central books, costing £1.2 million—no wonder that it went bankrupt. Furthermore, the council had 12 full-time equivalents in its maintained schools, costing £583,000.

Clauses 54 and 55 will increase that cost by giving more time off to public sector union officials at the taxpayer’s expense. That is not right when the Chancellor is asking Ministers to make cuts to their Departments across the board. Public services will be worse and the taxpayer will be expected to contribute more.

Furthermore, the Bill extends the right to facility time to equality representatives, who will now be allowed paid time off work to carry out activities for the purposes of

“promoting the value of equality in the workplace…arranging learning or training on matters relating to equality in the workplace…providing information, advice or support to qualifying members of the trade union in relation to matters relating to equality in the workplace…consulting with the employer on matters relating to equality in the workplace”

and

“obtaining and analysing information relating to equality in the workplace”.

Those are all noble goals, but that should not be done at the taxpayer’s expense.

[Sir Ashley Fox]

Does the shadow Minister agree that the only jobs that will be created by these Bills are for people employed by trade unions?

[Madam Deputy Speaker (Ms Nusrat Ghani)]

Before Mr Smith responds to that intervention, I must add that we have just shy of 40 people hoping to contribute to this debate, and I want to get them all in.

[Greg Smith]

As ever, Madam Deputy Speaker, I take your advice and will speed up. [Interruption.] The Minister urges me to carry on, but of course I would not ignore your advice—never say never again.

I make no comment on the value that those activities will add to public sector employers and their productivity. What I will say is that we have already seen this Government being happy to hand over large pay increases to trade unions with no guarantee of anything in return. That is why we have tabled amendments 293, 295 and 296, in an attempt to ensure that the taxpayer gets something out of this latest concession to the trade unions.

On amendment 297, trade unions can create significant disruption in the economy, whether by stopping work from taking place or preventing people from getting to work, school, hospital appointments or many other activities. We must strike a fair balance between the ability of trade unions to strike and the public whom we all serve.

Our amendment 297 will mean that vital public services such as the NHS can better plan and prepare for strikes. It simply seeks to keep the status quo of two weeks’ notice. Without adequate warning, constituents of Members from across the House are more likely to miss hospital appointments, not be able to travel to see loved ones or get to work, or suffer greater disruption when schools close due to strikes. That is part of the reason why, in the consultation on thresholds, 58% of those who responded supported retaining the 14-day period as it currently is, with 7% preferring a longer period. Two thirds of respondents therefore wanted the period to stay the same or be longer. Labour promised that it would work with business on this Bill, but its response to that consultation is just another example of the Government having their fingers in their ears and simply not listening. The reduction to 10 days is against the wishes of business and will do harm to all our constituents. That is why we have tabled amendment 297 to retain the notice period of 14 days.

On amendment 299, strikes should only take place when there is a clear mandate for them, but clause 58 will mean that strikes can happen with low thresholds by removing the 50% turnout requirement and the 40% support requirement. Combined with Government amendments to extend the mandate for strikes from six months to 12 months, this Bill allows unions to unleash waves of low-support, rolling strikes. Those costs will come on top of the national insurance jobs tax and changes to business rates—mistakes that the Government are already making—making it more difficult to run a business. That is why we have tabled amendment 299, which will remove clause 58.

There is much in this Bill to speak to, Madam Deputy Speaker, but I will not test your patience or the patience of the House further by going into those things. I look forward to a thorough debate that will further point out—not least through Conservative Members’ contributions—why the amendments to this Bill that the Government have tabled this afternoon will harm our economy, destroy jobs, and just give more power to the trade unions.

[Several hon. Members rose—]