Zero-hours Contracts

Julie Elliott Excerpts

Wednesday 16th October 2013 Commons Chamber

[Julie Elliott (Sunderland Central) (Lab)]

I am delighted that my hon. Friend the shadow Business Secretary has secured this Opposition day debate, which is about an issue that many hon. Friends and I have been campaigning on for months, if not years.

In July, as we have heard, I led a debate in Westminster Hall on zero-hours contracts. I do not intend to condense that rather longer speech today. In it, I referred to individual cases in care homes and explored the wide-ranging use of these contracts in the NHS, including for tens of thousands of nurses and midwives. Instead, I intend to take a broader approach and look at what the widespread use of these contracts says about our labour market.

I am pleased to note the presence of Conservative and Liberal Democrat colleagues, because in my Westminster Hall debate in July I was dismayed to see not a single Conservative or Liberal Democrat Back Bencher in attendance. Although the 17 Labour MPs who spoke led to an interesting and worthwhile debate, I have attended many Labour party meetings in my time and the debate was a missed opportunity for real cross-party dialogue.

It cannot be that not a single person in coalition constituencies is employed on zero-hours contracts. In fact, unlike the hon. Member for Hexham (Guy Opperman), who has said that he has not come across anybody in rural Northumberland who is unhappy with these contracts, I have met such people and they are out there.

I have spoken to many people who are on these contracts. Some are happy with them, but the vast majority are not. We should all be concerned that this country essentially has a large pool of workers living permanently on call, without guaranteed incomes, who do not know whether they will be able to pay their bills. We cannot sit by while workers on zero-hours contracts earn, according to research by the Resolution Foundation, 40% less than those on regular contracts.

A Labour Government would ban employers from insisting that zero-hours workers be available when there is no guarantee of work; stop zero-hours contracts that require workers to work exclusively for one business; and end the misuse of these contracts where employees are, in practice, working regular hours over a sustained period.

I believe that an outright ban would be neither helpful nor practical. Labour is clear on that. The hon. Member for Braintree (Mr Newmark) seemed to be under the illusion that we were calling for an outright ban, but that is not the case. A ban on zero-hours contracts could lead many less scrupulous employers simply to introduce one-hour contracts. We know that that is a realistic possibility, as the rise of zero-hours contracts seems to be linked to the closure of loopholes by the introduction of temporary and agency workers regulations.

As I have said on previous occasions, the issue is not zero-hours contracts, which have always been around, but the massive increase in what seems to be exploitation of workers, by which I do not mean employees, because the people on these contracts are not classified as such.

[Paul Farrelly]

My hon. Friend will remember from her time at the GMB—which, to correct the record from earlier, represents Asda employees in my constituency—that many agency workers find it hard to get mortgages, because they are not considered to be full-time employees. If someone on a short-term, zero-hours contract is asked whether they are a full-time employee and they answer honestly, does my hon. Friend agree that they, too, may find it difficult to get a mortgage at a time when mortgages are far more difficult to get hold of?

[Julie Elliott]

I agree. In fact, those people face difficulties in getting not just a mortgage, but a rental agreement, because they are not classified as an employee.

We need to take a more holistic approach to reforming the labour market. We need to understand that zero-hours contracts are just one of many ways that people in this country are having their rights eroded and their living standards squeezed. Energy costs, food costs, rail fares and private rental costs are hitting people’s pockets on the one hand, and unfair working practices are making them feel insecure for their incomes on the other.

The Labour party, like everyone in Britain, wants to see economic growth, but there is more than a lingering sense that sustained economic growth, when it comes, will not halt this cost of living crisis, because rail fares will still go up, the price of food will still soar and the cost of rent will continue to go through the roof. The hundreds of thousands of Britons who are on zero-hour contracts, temporary contracts or the minimum wage will not see the fruits of that growth.

[Charlie Elphicke]

Will the hon. Lady give way?

[Julie Elliott]

No. I am going to carry on so that others have a chance to speak.

Many lost their jobs or were forced to accept stagnant wages during the downturn, but they are seeing none of the proceeds of growth during the upturn. Those in work are earning, on average, £1,500 a year less than they were in 2010, while others have no choice but to put up with zero-hours contracts. Meanwhile, those out of work have been left on the failing Work programme.

The Institute for Fiscal Studies has calculated that for every pound spent paying the living wage, the Treasury saves 50p through not needing to pay tax credits and benefits. The Resolution Foundation has calculated that if everyone receiving the minimum wage received the living wage, there would be a £2.2 billion net saving, comprised of higher income tax and national insurance receipts. There is growing evidence that living wages boost productivity, motivation and performance and reduce the leaver and absentee rates, thereby offsetting the cost of the higher wage. The people who reject this analysis are the same people who said that the national minimum wage would lead to vastly higher levels of unemployment, but they were wrong—it simply led to higher wages.

I have welcomed the Government’s review of zero-hours contracts, but I think it is wholly insufficient. Indeed, parliamentary questions tabled by my hon. Friend the Member for Streatham (Mr Umunna) have found out that the Government have allocated all of three officials to the consultation. They are holding informal discussions with stakeholders without any formal calls for evidence or consultation. The irony that these three officials are looking into zero-hours contracts on a part-time basis should be lost on no one.

Reforming zero-hours contracts and increasing the number of people on the living wage is not just the right thing to do for hard-working people; it will also be good for the economy. Instead of shares for rights, we need to improve working conditions and boost wages. It is an injustice too far to expect people to live a life of permanent uncertainty, and I urge the Government to take a small step that will make a big difference.