Employment Rights Bill (Thirteenth sitting)

Justin Madders Excerpts

Tuesday 17th December 2024 Public Bill Committees

[The Chair]

Will everyone please ensure that all electronic devices are turned off or switched to silent mode? We will now continue line-by-line consideration of the Bill. The grouping and selection list for today’s sittings is available in the room and on the parliamentary website. I remind Members about the rules on declarations of interests, as set out in the code of conduct.

Clause 25

Public sector outsourcing: protection of workers

Question proposed, That the clause, as amended, stand part of the Bill.

[The Parliamentary Under-Secretary of State for Business and Trade (Justin Madders)]

Good morning, Mr Mundell; it is a pleasure to see you in the Chair. As is customary, I refer to my entry in the Register of Members’ Financial Interests and my membership of the Unite and GMB trade unions.

The clause will empower Ministers to reinstate and strengthen the two-tier code on workforce matters where contracts for public services have been outsourced to the private sector. It will ensure fair and equitable employment conditions for public sector workers who have been transferred into the private sector, and private sector workers who work alongside them on public service contracts, while maintaining a high quality of service for the public. It therefore directly supports the Government’s manifesto commitment to make work pay and will tackle the issue of unfair two-tiered workforces where staff working alongside one another to deliver the same contract do not have comparable terms and conditions of employment.

The powers are constrained so that the provisions of the regulations and the code, when developed, will apply only to new contracts entered into once the Bill comes into force, but can and will apply to re-procurements of services already outsourced where the re-procurement leads to a further transfer of workers. Ministers will have the power to make regulations specifying provisions to be included in relevant outsourcing contracts. The provisions may, for example, set out model contract terms that, where incorporated into contracts, will impose obligations on suppliers. Authorities will be required to take all reasonable steps to include those provisions in all relevant outsourced contracts.

The regulations made under the clause will, first, have the purpose of ensuring that transferring workers are treated no less favourably as workers of the supplier than when they worked for the public sector contracting authority and, secondly, have the objective of ensuring that workers of the supplier who are not transferred from the public sector but recruited by the supplier to work on the contract are treated no less favourably than those transferring workers. Alongside that, Ministers of the UK, Scottish and Welsh Governments will be subject to a duty to publish a code of practice addressing similar matters to which contracting authorities will need to have regard.

To ensure that the code is effectively enforced, there will be several forms of redress. Contracting authorities will be required to take all reasonable steps to ensure that suppliers meet their contractual obligations, as set out in the regulations. In addition, the procurement review unit, which will be established under our new Procurement Act 2023, due to commence in 2025, will be able to investigate whether a contracting authority has had regard to the code and taken appropriate steps in relation to provisions specified in the regulations.

These powers are being extended through amendments to the clause, which we discussed last week, to the devolved Governments of Scotland and Wales so that the benefits of a consistent approach to fair and equitable employment terms and conditions on relevant outsourced contracts can be spread throughout the UK. Fair and equitable working conditions are the right of all employees working alongside one other on the same outsourced contracts, and these measures will help to tackle that issue head on.

[Greg Smith (Mid Buckinghamshire) (Con)]

It is a pleasure to serve under your chairmanship once more, Mr Mundell.

Clause 25 has got me thinking about many moons ago, in 2006, when I was part of the team that won Hammersmith and Fulham council for the Conservatives for the first time since 1968. One of our first acts was quite literally to take the red flag down from the roof of the town hall. Part of the symbolism of that, which is why I mention it, was that the council, in 2006, was one of the last to outsource anything at all. Competitive tendering simply had not happened in that London borough. Everything was still a direct service run by the local authority, and we set about contracting out waste, grounds maintenance and many other services. Why? Because we wanted to deliver better value for taxpayers—indeed, we cut council tax by 20% over the eight years that we ran the council—and to improve service standards.

One of the things I learned in that process, and the reason my point is relevant to the clause, is that the first iteration of any contracting out—that first contract, be it for refuse collection, street cleansing, grounds maintenance or whatever—does not tend to result in economies and improvements. It is often in the second or third contract iteration where the cost savings and improvements in service standards start to be seen. That is partly because of the TUPE provisions that rightly exist to ensure that those staff who are being transferred from whatever part of the public sector we might be talking about—in this case, local government—transfer with the same rights, terms and conditions, and pay that they had at the point that they ceased to be direct employees of the council, or whatever other public service, and became employees of whoever won the contract.

The rub comes in the real-world application. In such cases, the staff members who transferred are on favourable terms and conditions, and probably better pay, than some of the staff that the contractor brings into the team. If it is immediately locked in that everybody new has to be on the same terms and conditions and pay scales, we will never achieve value for money for taxpayers, and we will never enable the contractor, be that a refuse collection company or whatever, to find efficiencies and savings at the same time as increasing service standards in the way that we all want to see. It might as well never be done in the first place. That makes me question whether that is in fact the ideological position that the Government want to take. I can see the Minister grinning; perhaps I have hit upon something.

I gently remind the Committee of the time when every refuse service and local government service was provided directly, in house, before competitive tendering and the revolution of the 1980s and the Thatcher Government. We can all remember what delivery of those services looked like in the 1970s: the rubbish piled up on the streets with no one collecting it.

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[Laurence Turner]

I would say better, having had some experience. The hon. Gentleman might want to return to that point.

On the substance of the clause, there were some concerns about the original incarnation of the two-tier code. It was purely voluntary and did not contain meaningful provisions for redress where an employer who had signed up to uphold the standards of the code did not follow through. I hope that that deficiency will be remedied when the associated regulations appear.

It is legitimate to have differences on points of principle. After the current Lord Maude abolished the two-tier code, the Secretary of State—now Baron Pickles—said that the Government of the time had

“Abolished the…two-tier code that…hindered the voluntary and independent sector from delivering better value for money.”—[Official Report, 26 March 2015; Vol. 594, c. 166WS.]

The shadow Minister has made much the same point. This was explicitly about driving down wages for the large number of people who are contracted out to deliver public services. I very much welcome the fact that this Government have a policy objective of making work pay. For a large number of people in the labour market who have been overlooked by politicians for too long, the clause represents an important step forward for remedying that deficiency.

[Justin Madders]

We have had a broad debate—very broad from my hon. Friend the Member for Birmingham Northfield, who took us on a canter through the history. He was right that it was the coalition Government who abolished the two-tier code, which is why it is welcome that the Liberal Democrats have realised the error of their ways; I welcome their support on this. Their spokesperson, the hon. Member for Chippenham, made the important point that the inherent unfairness of people doing exactly the same job for the same employer finding out that they are on different terms and conditions and are earning less is a big morale sapper. It is also a big issue in terms of workforce retention—one problem that we often see with outsourced contracts.

I will turn to the shadow Minister’s misty-eyed days at Hammersmith and Fulham, and I will raise him Ellesmere Port and Neston borough council, which was a great believer in direct provision of services; we certainly felt that was the best way to deliver value for the taxpayer and good-quality services. In his contribution, the shadow Minister alighted on the illusion of outsourcing—the fact that consultants can demonstrate that savings can be made, but when you drill into the detail, those savings are always off the back of the workforce. They are not some magical way of doing things differently. It is about cutting terms and conditions and it is about a race to the bottom, which we are determined to end.

[Greg Smith]

I do understand the ideological difference between the two sides on this point, but I take issue with the Minister that this is about a race to the bottom and cutting terms and conditions; it really is not. From my experience, it was not a matter of consultants, but of properly probing contracts, setting the right specification to deliver for the residents in the place that the council served, and requiring the flexibility to ensure that some people would be doing very different jobs in a different way from before in order to deliver that. It was not about wanting to cut anyone’s pay or terms and conditions; it was about service delivery and value.

[Justin Madders]

I take the shadow Minister’s point. I am not familiar with the machinations of Hammersmith and Fulham council in the 2010s, and it may well be that savings were made by doing things differently. But there is absolutely no reason why that cannot be done directly from a public body: if it is well led, if it is able to have constructive dialogue with its work force, savings can be made.

The difficulty with the shadow Minister’s analysis is that, while he may have been able to find savings for the taxpayer through those kinds of measures, too often the savings are made by cutting terms and conditions for new workers. That is why, as he said in his original contribution, the second or third outsourcing is usually where the savings happen, because it is when those new workers come in on lower terms and conditions that the savings begin to emerge. That is why the whole outsourcing trick is a con, because it is how those savings tend to be made.

When we add in the contract monitoring costs and the profit motivations for the outsourced company to make a living from these things, we can quickly see why it becomes a bad deal for the taxpayer. I certainly make no apologies for putting forward this proposal, because we think it is the right thing to do, to respect and value those who work in public service and ensure that they are paid the same as their colleagues for doing the same work. I therefore commend—

[Laurence Turner]

I thank the Minister for giving way at the death. Does he also recognise that one example of a council that tried to go down the wholesale outsourcing route was Northamptonshire? We all know how that story ended, and Eddie Martin, the Conservative former leader of Cumbria county council, stated that the then Government

“says that outsourcing is everything, but while it might get you an initial cheaper price, that price simply doesn’t last, you lose flexibility, and it causes a great deal of unrest.”

[The Chair]

I call the Minister to rise from the dead.

[Justin Madders]

I think that is the kindest thing that has been said about me this year, Mr Mundell. I thank my hon. Friend for his intervention; I think we can all see the difficulties. I know, from dealing with public bodies in my area, that sometimes when there is more than one person responsible for a service—the public body and then the contracting body—we find duplication, differing priorities and often a poorer service as a result, because there are competing ambitions in those bodies. That is one of the main reasons why we want to see a much more holistic approach to our public services. I commend clause 25 to the Committee.

Question put and agreed to.

Clause 25, as amended, accordingly ordered to stand part of the Bill.

Clause 26

Equality action plans

[Sarah Gibson]

I beg to move amendment 112, in clause 26, page 38, line 35, at end insert―

“(c) supporting employees with menstrual problems and menstrual disorders.”

This amendment would add menstrual problems and menstrual disorders to “matters related to gender equality”, in relation to any regulations made under the Bill to require employers to produce equality action plans.

I am very pleased to move this amendment. First, as the Bill stands, there are provisions for businesses to report on the impact of menopause on women in the workplace as part of the equalities impact assessments. I think the hon. Member for Sheffield Brightside and Hillsborough (Gill Furniss) is right to table this amendment and to remind us all that menstrual problems can hinder women at any point in their working life, not just as they enter menopause. She is the chair of the all-party parliamentary group on women’s health and an officer on the APPG on endometriosis; I feel confident that she has tabled this amendment with the best intentions. It seems an omission that this issue was not included in the original Bill.

Several constituents have contacted me about endometriosis, and specifically its impact on them at work. Endometriosis costs the UK economy £8 billion a year in treatment, loss of work and healthcare costs, and it takes an average of eight years to get a diagnosis. One in six workers with endometriosis leaves the workforce due to their condition—an issue that the Government and employers cannot afford to ignore. Those people could go back to work and stay in work if there was additional flexibility for them.

As one of my constituents told me—she does not wish to be named for these reasons—many employees with endometriosis find that their employers do not believe them about their symptoms, that their flexible working requests are refused and that they are subject to discriminatory automated absence procedures that penalise short but intermittent time off work. The amendment seeks to address that injustice. I want to be very clear that I support it, and I hope that the rest of the Committee will see its importance.

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[Justin Madders]

Clause 28 introduces schedule 3, which inserts proposed new part 8A into the Education Act 2002. Paragraph 1 of schedule 3 contains proposed new sections 148A to 148R of the 2002 Act and will be discussed separately.

The reinstatement of the school support staff negotiating body will give school support staff the recognition they deserve for the crucial role they play in children’s education and development. Establishing the SSSNB through the Bill will help ensure that schools can recruit and retain the staff needed to deliver high-quality, inclusive education and support the Government’s work to drive high and rising standards in schools, so every child has the best life chances.

The body will bring together representatives of school support staff employers, representatives of support staff, an independent chairperson and a representative of the Secretary of State. The SSSNB will consider the remuneration, terms and conditions of employment, training and career progression opportunities for school support staff. Its remit will lead to the creation of a national terms and conditions handbook, fair pay rates and clearer training and career progression routes for school support staff in England.

Most school support staff are currently employed on National Joint Council for local government services pay and conditions. The NJC is a negotiating body made up of representatives from trade unions and local government employers. Existing NJC arrangements are not statutory or school specific. Moving to a school-specific body where pay rates and pay awards for support staff are negotiated by school support staff employer and employee representatives and ratified by the Secretary of State will both help to ensure fair pay rates for school support staff and allow central Government to have a strategic view of pay across the school workforce.

It is essential for the SSSNB to have a statutory remit so that all prospective and current support staff in state schools nationally benefit from a transparent, guaranteed core pay and conditions offer. The Bill re-establishes the SSSNB as an unincorporated body on a similar footing to the previous body from 2009 that was abolished by the coalition Government in 2010.

As education is a devolved matter, the extent of these measures is therefore England and Wales and the measures will apply to England only. This is consistent and in line with the remit of the School Teachers Review Body being England only.

The 2009 SSSNB included only those support staff employed by local authorities and governing bodies to work in maintained schools within its scope. Roughly half of schools are now academies, compared with around 200 in 2009 when the body was previously established. Support staff employed by academy trusts are now included within the SSSNB’s remit. It is crucial that the body has a remit for all state-funded schools in England in order to achieve greater national consistency, irrespective of which type of school support staff work in. That is a point that we may come on to debate in due course.

[Greg Smith]

The Opposition have tabled a number of amendments that probe what is introduced by clause 28 and schedule 3, which we will come on to in subsequent debates today. I will reserve the bulk of my remarks for those debates, although, as clause 28 introduces schedule 3, I will preview those debates now by noting our strong opposition to these provisions. There was a very good, solid and rational reason that the former Secretary of State for Education during the coalition years—now editor of His Majesty’s Spectator magazine—abolished SSSNBs, which was to give that flexibility and freedom to the quite right and good, educational standards-raising revolution in education that came through the creation of the academies by the last Labour Government and in particular the creation of free schools by the last Conservative Government, including in the coalition years. Clause 28 and schedule 3, which we will come on to shortly, seek to undo a lot of that. For the reasons I will outline when speaking on those amendments, I think this part of the Bill requires a rethink.

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[Sir Ashley Fox]

I am trying to think of how clause 28 and schedule 3 relate to SEND education, and I am struggling. I do not believe that the SEND system is a success, and I do not think that more central control is the way to solve that. In fact, one of the problems is that every time there is a problem, we in Parliament and Whitehall think, “The solution is a directive from above. That will sort out the problem.” That is precisely the model that the Government are adopting in clause 28 and schedule 3: “There’s a problem with low pay, so we will set up a process in London that will help matters.” That is not true at all.

I hope we can all agree that the purpose of spending money on education is to improve the life chances of our children. How are resources allocated? Are they best managed on a school basis or an academy basis? Or are they best decided in London? I argue that they are best decided on a school or an academy level. As I say, I fear that clause 28 and schedule 3 are the beginning of a process in which we will see more and more central control exerted over schools, and that that will lead to worse outcomes for our children.

[Justin Madders]

I will respond in the strict terms that you have directed, Mr Mundell. I also point out to Members that an education Bill will be presented today. So there will be an opportunity for the wider debate that Members are keen to have, when that Bill gets its Second Reading in due course.

[Nick Timothy]

Will the Minister give way?

[Nick Timothy]

I will avoid the temptation to start to read out the PISA statistics. It is important that the Bill that is published today is seen alongside this Bill, because together they chip away quite substantially at the academy freedoms that have been behind school reform. It would be good to hear the Minister acknowledge that fact.

[Justin Madders]

Of course, the Bill has not been published yet, so we cannot stray into that. We may be able to get on to it this afternoon, but we are trying to help some of the most poorly paid people in our society, who do such an important job. My hon. Friends the Members for Penistone and Stocksbridge, for Birmingham Northfield and for Stratford and Bow all talked about how important teaching assistants are, particularly in supporting those with special educational needs. My hon. Friend the Member for Birmingham Northfield was right that it is shameful that the Low Pay Commission has now deemed teaching assistants to be part of the low pay environment. We are determined to address that, which is why the reinstatement of the SSSNB is an important step.

Let us reflect on some of the evidence that we have had—for example, the GMB evidence. Andy Prendergast said:

“we see increasingly more pupils with special educational needs go into mainstream education, and they need that additional support.”––[Official Report, Employment Rights Public Bill Committee, 28 November 2024; c. 132, Q136.]

Some of those staff do detailed things such as phonics, supporting pupils with special educational needs and disabilities, and help to deliver classes.

I take the point that has been made about the NJC being an inappropriate way of evaluating and assessing job value. It is clear—indeed a number of other pieces of written evidence have supported our assertion—that the NJC is not the right vehicle for assessing teaching assistants’ pay. We believe that the SSSNB is the way ahead.

The hon. Member for Bridgwater talked about this being a centralising move. Of course, the SSSNB will comprise mainly employers and employee representatives. It will not be a Whitehall-dominated machine.

[Sir Ashley Fox]

But to the extent that the SSSNB will decide the terms and conditions of assistants in Bridgwater, Mid Buckinghamshire and Birmingham Northfield, and those conditions will apply to all teaching assistants, regardless of the school’s or academy’s view on the subject, it is a centralising measure, does the Minister not agree?

[Justin Madders]

It is a necessary measure because, as we have seen, teaching assistants and school support staff have suffered in recent years. The point that the hon. Member for Chippenham and several other Members made about funding is correct. It will, of course, be incumbent on future Governments to ensure that any proposals that come forward are affordable. It should be noted that the recent Budget put some additional funds into special educational needs.

Let us look at why this measure is needed. We know that there is a chronic issue of low pay, a lack of career progression and damaged recruitment and retention among school support staff. A survey of teaching assistants found that 27% were considering leaving education altogether—surely we need them to stay—while 60% cited low pay as a reason for leaving, and 40% said that lack of opportunities for progression was. Eighty-nine per cent of schools said they found recruitment difficult, particularly in respect of teaching assistants, and 78% said they found that group hard to retain. There were similar figures in terms of the difficulties with the recruitment and retention of teaching assistants with SEND specialisms.

We are setting up this body to recognise that these people do a critical job in our education system and that they are not properly represented at the moment. They do not have a proper voice, and they do not have a proper mechanism to ensure that the valuable work they do is properly measured, remunerated and recognised. That is why the SSSNB is so important.

Question put, That the clause stand part of the Bill.