Post Office Horizon

Justin Madders Excerpts

Tuesday 30th July 2024 Commons Chamber

[Kevin Hollinrake (Thirsk and Malton) (Con)]

(Urgent Question): To ask the Secretary of State for Business and Trade to make a statement on financial redress for postmasters and outstanding issues relating to the Post Office Horizon scandal.

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

As hon. Members will know, convictions across the UK have been quashed through recent legislation, and those affected are now able to apply for financial redress under the Horizon convictions redress scheme. The scheme will be wholly delivered by the Department, not the Post Office. All the forms of redress, including those pursued under the group litigation order, will be delivered by the existing schemes.

Since taking office, this Government have continued to work closely with the Scottish Government and the Northern Ireland Executive to identify those who have had their convictions overturned. Letters have started to be issued to those eligible that will confirm that their conviction has been quashed and provide further information on how to access financial redress. But I would encourage those who believe that they are eligible not to wait for a letter. Please do come forward now and register for the Horizon conviction redress scheme.

We have put guidance on gov.uk to help people know where they stand: whether their conviction has been overturned and, if eligible, how to apply for redress through the registration and application process. Victims will be able to choose from two options: first, they can either accept a fixed settlement of £600,000; or, secondly, they can choose a full claim assessment if they believe their losses exceed £600,000 and wish to have their application fully examined by the Government.

No matter what route they choose to take, once an applicant’s eligibility is confirmed, they will be paid a preliminary payment of £200,000. We are making sure that they can access historical data from both the Post Office and His Majesty’s Revenue and Customs to support their decision and the application. We also recognise that, with the best will and support in the world, in a few cases, some information may not be retrievable, but I assure hon. Members that, even in those cases, we will do all we can to ensure that a fair offer is made to sub-postmasters who have suffered this terrible injustice. This House was united in the last Parliament in its wish to see justice for sub-postmasters. In this Parliament, we intend to deliver on that.

[Mr Speaker]

I call the shadow Minister.

[Kevin Hollinrake]

It is disappointing that I have again had to ask an urgent question to get the Government to come to the Dispatch Box. It is also disappointing that neither the Secretary of State nor the postal affairs Minister—the Minister of State, Department for Business and Trade, the hon. Member for Harrow West (Gareth Thomas)—has responded to either of the urgent questions. This is clearly an important matter that deserves full scrutiny by this House. Despite earlier promises only 12 days ago to give the House a significant update, only a written statement was available.

One of the final acts of the last Government was to pass legislation that, for the first time in history, overturned hundreds of convictions and set in train a process to provide redress to the victims. We made a clear commitment that the victims would be able to apply for redress before the summer recess. That commitment has not been honoured, although claimants can now register for redress. To do so, they need a reference number that is available only to individuals written to by the Ministry of Justice, which has today confirmed that only 10 of the 700 postmasters have received such a letter.

I ask the Minister: when will the other 690 postmasters be written to? Assuming claimants apply for the most rapid form of redress—a fixed sum award—when will the first £600,000 payments be made? The Secretary of State will acknowledge that we had conversations regarding Court of Appeal convictions and those refused leave to appeal that were not quashed by the legislation. What steps is the Minister taking to ensure that those cases are given assistance to overturn their convictions?

The last Government also announced that we would top up claimants in the Horizon shortfall scheme to a minimum payment of £75,000. How many of the thousands of claimants in this scheme have been written to to that effect? Finally, where is the Secretary of State, or where is the hon. Member for Harrow West, who has been appointed post office Minister?

[Justin Madders]

We promised to update Parliament before the summer recess, and we have done that by way of a written ministerial statement. I note that, when the shadow Minister was the Minister, he came and answered on most occasions for the Government. We certainly did not take that as an indication that the Government were taking this matter any less seriously than they should, and that is not the case now either. I understand the frustration that the shadow Secretary of State has about the number of letters that have gone out, but there have been difficulties in corroborating some of that data. I understand that, when he made that promise as a Minister, he did so in good faith, but it has turned out that additional physical checks have been required. We have had to access court documents—sometimes stretching back decades—which has meant that there have been delays. The Ministry of Justice has put more resource into that to ensure that work carries on at pace.

As the shadow Secretary of State has noted, the website is now up and running and applicants can register on it. I am pleased to report that, as of this morning, 89 people have already done so. We hope that, once verification checks have been completed, payments can be processed within 10 working days. We understand that the question on the Court of Appeal was discussed at length during the passage of the Post Office (Horizon System) Compensation Act 2024. The matter deserves further consideration, and I understand that the Minister for postal services has had conversations on what we can do in that respect.

[Liam Byrne (Birmingham Hodge Hill and Solihull North) (Lab)]

I welcome the answer provided by my hon. Friend. He will remember that, when the Select Committee reported just four or five months ago, we noted that 80% of the budget for redress had not been paid out. We suggested to the now shadow Secretary of State a number of measures to put into the Bill to speed up the process. Those amendments were rejected. Can the Minister now assure us that he has a grip on this and that we will now begin to see cheques in the post much faster?

[Mr Speaker]

Order. May I just say that Members should speak through the Chair, not to the Minister? As an established Member of this House, I am sure that the right hon. Gentleman would not want to start on the wrong foot with me.

[Justin Madders]

My right hon. Friend makes an important point. We want payments to be processed as quickly as possible. Data is updated monthly on the Government website. We can see that, in terms of the group litigation order, 210 offers have now been made. Under the Horizon shortfall scheme, of 2,730 claimants, altogether 2,417 offers have been accepted. Of the 110 convictions on the overturned convictions scheme, initial payments have now been made to 103 of those people.

[Mr Speaker]

We come to the Liberal Democrat spokesperson.

[Sarah Olney (Richmond Park) (LD)]

It has been said many times across this House, but it bears repeating: this was an appalling miscarriage of justice. The shocking dishonesty of Post Office officials found its match only in the bravery of the sub-postmasters who stood up to them. The Liberal Democrats welcomed the legislation in the previous Parliament to finally deliver justice by quashing their convictions, and we likewise welcome measures to ensure that those affected get the compensation they deserve. However, what we have seen with previous compensation and redress schemes for the victims of this scandal is a pattern of delay, complication and inefficiency. Neither the Post Office nor the Department for Business and Trade has earned the necessary trust from the sub-postmasters to administer the schemes. With that in mind, the Business and Trade Committee recommended in 2022 that an independent intermediary body be set up. Does the Minister agree that it is now time to appoint that independent body to ensure that these schemes get delivered fairly, effectively and without delay?

[Justin Madders]

I thank the Liberal Democrat spokesperson for their contribution. We are concerned that matters are taking too long. We have been working with lawyers who have signed up to a framework for representing claimants, and we are looking at ways we can speed the process up. There are issues in terms of collating enough expert evidence to support the claims, but we are looking at how that can be accelerated. On the independent process, we are looking at an independent mediation step after the initial decisions and offers are made, and ultimately an independent appeal decision will be considered as well.

[Ian Lavery (Blyth and Ashington) (Lab)]

A whole number of individuals out there have been convicted and have paid huge amounts of money—£10,000, £20,000 or £30,000—back to the Post Office, but because they were directly employed not by the Post Office, but perhaps by their sub-postmaster, they cannot get any redress. They are victims of the Horizon scandal equally as much as anyone else. What advice can the Minister give to people in my constituency of Blyth and Ashington who find themselves in those circumstances?

[Justin Madders]

My hon. Friend refers to some specific circumstances that I would welcome further information on. If he can contact the Department, the relevant Minister will look through those circumstances to see whether there is anything we can do, because we do not want anyone to be out of pocket as a result of this scandal.

[Sir Gavin Williamson (Stone, Great Wyrley and Penkridge) (Con)]

Communities across the country were impacted by the Horizon scandal, and one of those was Wheaton Aston. Not only did Wheaton Aston lose a much-loved postmaster, but it lost its post office. Will the Minister look at the specific case of Wheaton Aston not just in terms of that postmaster getting compensation, but to take up the issue with the Post Office to ensure that a post office is returned to the village?

[Justin Madders]

I will certainly relay that back to the Department, and we will look in some detail at that. It is important that communities have a post office that they can access. They are a vital part of our infrastructure in this country and a vital lifeline for many individuals, and we want to make sure that every community is served as much as possible.

[Pamela Nash (Motherwell, Wishaw and Carluke) (Lab)]

I take a moment to pay tribute to my predecessor, Marion Fellows, for the work she did on this issue throughout her time in this House. I was delighted to hear from the Minister that there have been conversations with the Scottish Government regarding this issue and looking for justice and redress for sub-postmasters. How confident is he that no further obstacles will be put in the way of justice and redress in Scotland by the Scottish Government following those conversations?

[Justin Madders]

I join my hon. Friend in paying tribute to her predecessor, who was tenacious in her pursuit of this matter. We have had a number of conversations with the Scottish Government, and we do not want to see any difference between how this scheme is administered in any part of the country. We are confident that will be the case.

[Dame Caroline Dinenage (Gosport) (Con)]

This is a national scandal, and it is almost impossible to quantify the loss of trust in the Government and the Post Office that has resulted. Can the Minister set out a little more on what the Government intend to do to ensure that the information and support to make the applications to the redress scheme will be there for every single postmaster who has been affected and every single one who had a conviction quashed?

[Justin Madders]

The hon. Member asks an important question. Disclosure packs are being prepared for every claimant, which will contain what we believe is all the information they need to assess whether they wish to accept the fixed sum, or to proceed to a more detailed assessment of the claim. The pack will include details of their contracts and remuneration with the Post Office, details of whether they were eligible for the Royal Mail share plan and any other information that the Department can obtain that is requested. We want to work at pace with individuals to ensure they have all the information they need to make an informed decision.

[Kate Osborne (Jarrow and Gateshead East) (Lab)]

The Minister will be aware that I have long campaigned on this issue. He might not yet be aware of a letter I sent to his Department highlighting issues with the current compensation schemes, as well as calling attention to issues with the original 555 sub-postmasters, one of whom is my constituent Chris Head. Chris was one of the thousands of people impacted by the Horizon scandal, and he has still only been offered 17% of his verified claim. Will the Minister agree to meet me and Chris to discuss these issues?

[Justin Madders]

I am indeed aware of my hon. Friend’s letter and all the work she has done over a number of years in support of her constituents and the wider sub-postmaster community. I am sure that the relevant Minister will agree to meet her and her constituent, and I will make sure that request is passed on to him.

[Llinos Medi (Ynys Môn) (PC)]

As the Member for Ynys Môn, I represent Lorraine Williams and the formidable Noel Thomas, who spent his 60th birthday in jail for a crime that never took place. It is clear that sub-postmasters continue to be treated appallingly by the UK Government in the wake of the Horizon scandal and made to feel guilty for the cost of compensation to the public purse. Can the Minister give confidence to Noel that the new Government will compensate for the real human cost of the suffering caused by this awful scandal?

[Justin Madders]

We do not want sub-postmasters to feel guilty for claiming what is rightfully theirs. What this place has decided is their entitlement. We have taken measures to ensure that they will not have to foot any legal bills for taking advice in respect of their applications and we want to ensure that every potential head of loss is covered and adequately compensated for. We want to make the process as easy and swift as possible for those affected.

[Rupert Lowe (Great Yarmouth) (Reform)]

I am pleased to hear from the Minister that the Government will expedite payments to those people who have been extremely badly treated by a state-owned entity in this national scandal. Will he do anything about those people who arguably knew that the Fujitsu software called Horizon was deficient and yet still brought legal cases against sub-postmasters, many of whom went to prison? There must be some redress and, going right the way back, those who were responsible for bringing cases against innocent people in the knowledge that the software was deficient must suffer some form of penalty.

[Justin Madders]

The hon. Member makes an important point, which has been raised on a number of previous occasions. We believe that the correct approach is for the inquiry to assess those individuals’ particular culpability, and then we will take forward its recommendations. It is important that we see individuals take some responsibility and accountability for their actions.

[Robbie Moore (Keighley and Ilkley) (Con)]

The Horizon IT scandal is without doubt one of the greatest miscarriages of justice in our history. While we cannot change what has happened, we must establish what went wrong. Will the Minister assure the House that he will carefully consider the findings of the Post Office Horizon IT inquiry? Does he agree with the shadow Secretary of State that there should be prosecutions of those deemed responsible?

[Justin Madders]

We are taking a close interest, as the hon. Member would expect, in the evidence coming forward in the inquiry. Much of it is shocking. The amount of obfuscation and, shall we say, misinformation put out by a number of individuals is concerning. We think it is right to wait and see what the chair of the inquiry recommends in terms of future action, but we are committed to looking at that closely and ensuring that individuals take responsibility for their actions.

[Christine Jardine (Edinburgh West) (LD)]

One of my constituents was about to end more than 20 years of service with the Post Office with a comfortable package, but she was persuaded to take on a post office for two months. She did so and then got caught up in the Horizon scandal. She had months of trauma, trying to prove her innocence and arguing with the Post Office, and then she was sacked. She lost the package and incurred a lot of expense. I spoke to the previous Minister about that.

My constituent has applied for compensation, but she has been told that she is not entitled because she did not have a contract, which she says she did. Will the Minister meet me to discuss how we can protect such people and ensure that they get the compensation they are entitled to, and that we do not have this continual excuse-finding for not paying people who deserve compensation?

[Justin Madders]

I am grateful to the hon. Member for that question. Where there are evidential difficulties, we are looking at other ways of ensuring that those who should be eligible are entitled to claim. I am happy to have further conversations with her in that respect.

[Jim Shannon (Strangford) (DUP)]

I thank the Minister very much for his answers to the questions posed. I make representations for the 26 postmasters from Northern Ireland who have been fighting for years to clear their names. While it is fantastic that movement has been made to undo the wrongs of this scandal—I thank the Minister and the Government very much for that—what steps have been taken to ensure that compensation is issued to all postmasters across the UK in a timely manner to avoid more delays and miscarriages of justice, including for those 26 from Northern Ireland?

[Justin Madders]

We are working closely with the Northern Ireland Executive to ensure that all the information required is verified and corroborated so that those individuals in Northern Ireland who have been caught up in this scandal receive that letter as soon as possible.

Post Office Horizon Scandal

Justin Madders Excerpts

Thursday 18th July 2024 Commons Chamber

[Kevin Hollinrake (Thirsk and Malton) (Con)]

(Urgent Question): I congratulate you on your re-election, Mr Speaker, and thank you for granting this urgent question, which is to ask the Secretary of State for Business and Trade if he will make a statement on financial redress for sub-postmasters and outstanding issues relating to the Post Office Horizon scandal.

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

I congratulate the shadow Secretary of State on his new position and on securing the first urgent question of this Parliament.

Members will know that the Government made a key manifesto commitment to ensure that justice and compensation are delivered as swiftly as possible for every postmaster caught up in the Horizon scandal. The Secretary of State has already met Sir Alan Bates, Kevan Jones and the chair of the Post Office, Nigel Railton, to discuss the progress being made and what more can be done. The Government intend to make a significant announcement on the new redress scheme before the summer recess. This scheme will apply to postmasters whose convictions have been overturned by the Post Office (Horizon System) Offences Act 2024 passed in the last Parliament.

[Kevin Hollinrake]

I welcome the Minister to his role. I say in all sincerity that I wish him the very best of luck. We on the Opposition Benches, in the national interest, wish the Government to succeed. It is vital that his Department succeeds in its brief. When British businesses do well, we all do well.

I hope this urgent question, on a matter on which the House has been in agreement, will set us off on the right foot in working together in the national interest. That matter is of course compensation for sub-postmasters affected by the Horizon scandal. I was the previous Post Office Minister, and the House will know of my commitment and my party’s commitment to the individuals whose lives have been torn apart by this scandal.

It is right that the Post Office (Horizon System) Offences Act received Royal Assent during wash-up to quash the convictions of hundreds of affected postmasters, but the Minister will know that the Act itself does not provide compensation, which is why, alongside that legislation, we announced plans for a new Horizon convictions redress scheme. This scheme will make compensation payments to those who have had convictions quashed by the Act.

In government, we ensured that Royal Assent was achieved as soon as possible so that there was no gap in the availability of compensation. It is only right that postmasters have access to swift and fair compensation. That is why we overturned those convictions. Those with overturned convictions have the option of immediately taking a fixed and final offer of £600,000. It is also why, in government, we changed the rules for those in the Horizon shortfall scheme so that they are entitled to a £75,000 fixed-sum award, bypassing the assessment process; so that all full and final settlements below that figure would be automatically topped up; and so that an appeal process for those in the HSS is also considered.

Although I am pleased that, as of 31 May, approximately £222 million has been paid to over 2,800 claimants across the scheme, I must push the Government for more detail on when the redress payments set out by the Horizon convictions redress scheme can be expected—we were told that it would be by July. I also note that the Department for Business and Trade has said that it “continues to work” on the new Horizon convictions redress scheme.

I ask the Minister—[Interruption]—when will the scheme be up and running? When does he expect the £75,000 top-ups and the HSS appeal process to be implemented, and the victims to be contacted to that effect? When will he open the scheme? Will he announce a date for full compensation under the Horizon convictions redress scheme?

[Mr Speaker]

Order. I gently say to the Chamber that it is a new beginning, and we want to start on the right foot, not the wrong foot. It is difficult to go from Government to Opposition, but there is a two-minute limit for the Opposition and a one-minute limit for the third largest party. Please let’s stick to the rules and start as we mean to go on.

[Justin Madders]

Thank you, Mr Speaker.

The shadow Secretary of State set out the intent he had in government, which we intend to carry on. We also believe there is absolutely no reason why we should not continue to work on a cross-party basis, as we agree with him on the importance of delivering fast and fair compensation, which is at the heart of all we are trying to achieve. We will be making a statement by the end of July, before the summer recess. As the shadow Secretary of State has already noted, we have committed to do that. We are working at pace with officials, victims and those who have been affected by the scandal to work up the detail, and an announcement will be made in due course.

[Jon Trickett (Normanton and Hemsworth) (Lab)]

It is good to see you back in your place, Mr Speaker. The new Minister will recall the old saying that a new broom sweeps clean, and I am sure he will make progress very quickly indeed. It seems to me that the Post Office scandal reveals a wider problem in British society. Whether it is Orgreave, Grenfell, contaminated blood or the problems at Hillsborough, the British establishment seems incapable of listening to the voices of ordinary people. Will he raise that matter with other Ministers and see whether there is a way for this Government to ensure that is not repeated?

[Justin Madders]

My hon. Friend raises an interesting point. In recent years, we, as Members, have reflected on the question of political accountability for decisions that have been taken and actions that have taken place over many years. We will be reflecting on how best to ensure there is genuine political accountability in the system.

[Mr Speaker]

I call the Liberal Democrat spokesperson.

[Mr Alistair Carmichael (Orkney and Shetland) (LD)]

I also welcome you back to your place, Mr Speaker. It is a genuine pleasure for me, as the Liberal Democrat spokesperson, to be addressing the House on behalf of the third largest political grouping. My party will use the privilege of that position to hold the Government and Ministers to account. We will not be using it simply to stoke division and manufacture grievance. That is what the people of the United Kingdom, and Scotland in particular, voted for.

At the heart of the Horizon scandal was the culture at the centre of the organisation that failed to respect the work that was being done by sub-postmasters at the frontline. The Minister and the Secretary of State will meet with the chief executive of the Post Office. What evidence have they seen that that culture has actually changed?

[Justin Madders]

I do not know if the right hon. Gentleman is aware that the current chief executive officer has stepped aside for a brief period to concentrate on the inquiry. Over the coming months, we will be reflecting on the important questions that the right hon. Gentleman raises, particularly when the outcome of the inquiry is known.

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

Referring to the point raised by my hon. Friend the Member for Normanton and Hemsworth (Jon Trickett), what role does the Minister think this Government can find for third party organisations, such as WhistleblowersUK or those organisations that work with people to highlight such scandals? As my hon. Friend pointed out, this was a systematic failure across Government and society, and we simply cannot allow it to happen again.

[Justin Madders]

My understanding is that the last Government undertook a consultation on whistleblowing. We are reflecting on the outcome of that and on the important point my hon. Friend raises. Across a whole range of bodies in this country, whistleblowers have not been heard. We need to consider whether the current legislation gives them sufficient confidence to speak out, and whether their actions and concerns are being addressed.

[David Mundell (Dumfriesshire, Clydesdale and Tweeddale) (Con)]

Many congratulations on your re-election, Mr Speaker. I congratulate the Minister on his appointment. I know he is genuinely committed to promoting British business at home and abroad, but is he aware of a serious issue flowing from the Horizon scandal that is now affecting current postmasters? In order to express their disgust at what has happened in relation to Horizon, some members of the public are not using the Post Office in the way they did previously. Will he and the Government commit to promote the view that the Post Office is safe to use, because the scandal has been resolved and because using post offices is good for the community?

[Justin Madders]

I am concerned to hear about such incidents. It should go without saying that the postmasters are not the ones who should take the opprobrium of the public on this matter. They are doing a fantastic job. They hold communities together and provide a public service. We should celebrate that and encourage people to use their facilities as much as possible. If the right hon. Gentleman has specific examples of postmasters receiving abuse or people being discouraged to use their services because of the scandal, I would be interested to hear about them.

[Caroline Nokes (Romsey and Southampton North) (Con)]

It is a delight to see you back in the Chair, Mr Speaker. There were many sub-postmasters and mistresses who were not convicted, but who are seriously out of pocket due to the shortfalls that they themselves made up and deeply traumatised by the experience that they went through. Can the Minister provide reassurance that the Department will seek to ensure that they are supported, and that the compensation scheme is swift, effective but also very straightforward for them?

[Justin Madders]

I thank the right hon. Member for her question. Those are the principles that we want to address and carry on with from the previous Government: the system should be fair, swift and simple. We know that postmasters have already gone through an incredibly difficult time. We do not want to make it even harder by having a convoluted system. We absolutely agree that justice should be fair, quick, complete and straightforward for people.

[Kit Malthouse (North West Hampshire) (Con)]

Beyond compensation, one of the most important things that campaigners are looking for is consequences for those people who played a part in the creation of this scandal. The Prime Minister has made much about the integrity and accountability of his Government. Presumably that is retrospective. What consequence does the Minister envisage for those current serving Government Ministers who are deemed by the inquiry to have been negligent in their conduct in ministerial office in the past?

[Justin Madders]

That is a very important question. It would be premature of us to draw conclusions before the inquiry has been completed but, absolutely, we should be looking very carefully at all those individuals whose behaviour unfortunately led to the scandal happening and to it taking far too long to address. That is a matter for the inquiry to make recommendations on and, certainly, we will be looking to follow those up.

[Jim Shannon (Strangford) (DUP)]

I welcome the Minister to his place. I know that he was vociferous on this issue when he was on the Opposition Back Benches, so I have absolutely no doubt that he will deliver on it.

Some 26 postmasters implicated in the scandal in Northern Ireland are worried and concerned. It is imperative that all postmasters feel that they can have an open and frank discussion with no fear of repercussion in the upcoming investigations, and there can be no further unwarranted delays. Can the Minister confirm that, as a priority, he will make sure that postmasters have access at every level to ensure that their concerns are addressed and that he will make every effort to take steps in the right direction? Thank you so much, Mr Speaker.

[Mr Speaker]

I do not see why that point should have come last. [Laughter.]

[Justin Madders]

What a surprise to see the hon. Member in his place today. I am sure that this will not be last time that we have an exchange across the Dispatch Box, but he does raise an important point. We absolutely agree that we need to make it as easy as possible for postmasters to raise their concerns and to get the justice that they have so long waited for.

[Mr Richard Holden (Basildon and Billericay) (Con)]

I congratulate you, Mr Speaker, on your return to your place, and the Minister on taking up his appointment.

Compensation is one part of this, but what victims of this scandal, such as Betty whom I met, want to see are truth and accountability. I am referring not just to Ministers, to whom my right hon. Friend the Member for North West Hampshire (Kit Malthouse) referred, but to those involved in the scandal. What can the Minister say to people in the Post Office and to Betty, who want to see those responsible in the Post Office properly held to account, as well as the compensation for their suffering?

[Justin Madders]

I thank the hon. Member for his question. He makes an important point. Justice is one side of the coin, but there is also accountability for what has happened. A lot of people want to see that: not just those directly affected, but everyone who has been outraged by the years of inertia and obfuscation that we have seen in this scandal. The purpose of the inquiry is to get to the heart of who knew what, who did what and who did not do what they should have done, and whether individuals should take some responsibility for their actions. I have no doubt that, when those recommendations are released, we will want to see some very swift action on the back of that.

[Andrew George (St Ives) (LD)]

I was privileged to be one of those MPs who, a decade ago, was campaigning on this issue in Parliament with the now Lord Arbuthnot and campaigning on cases in my constituency—people had been treated appallingly. Those people have not yet received compensation. If there is going to be any kind of delay in compensation to those who have suffered, is there any way that early, interim payments can be made to those who need the support now and certainly before too long?

[Justin Madders]

I thank the hon. Member for his question, and join him in praising Lord Arbuthnot’s work in this area. As of 31 May, £222 million has already been paid out in compensation. There have actually been significant interim payments as well. We understand that, while this is a very large scheme, it is important that we get early payments, so I assure the hon. Member that interim payments are a very large part of this programme.

[Dr Kieran Mullan (Bexhill and Battle) (Con)]

The legislation that we passed was a blanket measure. It might be clear to us who is or is not included, but for the individuals affected it will not necessarily have been clear. Will the Minister update the House on the progress that has been made in identifying them and writing to them to confirm that their convictions have been quashed?

[Justin Madders]

I thank the hon. Member for his important question. We have been working closely with colleagues in the Ministry of Justice to identify those people who are affected by the legislation, and they will be contacted in due course if they have not been already.

Terms and Conditions of Employment

Justin Madders Excerpts

Tuesday 14th May 2024 Commons Chamber

[Justin Madders (Ellesmere Port and Neston) (Lab)]

Let me begin by referring to my entries in the Register of Members’ Financial Interests.

I am grateful to the Minister for introducing the debate, and for making the necessary amendments to primary legislation so soon after the code of practice was approved. It has taken us more than two years, but today we see the first actual legislative change to tackle the blight of dismissal and re-engagement—or fire and rehire, as it is more commonly known. We will not oppose today’s motion, but we are clear that the order does not go anywhere near far enough towards ending this cruel practice, or meet the promises made by the Government.

During the two years since we witnessed those disgraceful scenes at P&O, it has continued to benefit from taxpayers’ cash through Government contracts, and fire and rehire hasusb continued to toxify our industrial relations landscape. While the P&O Ferries case itself did not entirely constitute fire and rehire, it bore many of the hallmarks of the practice and exposed the gaping holes in our law—holes that continue to be exploited; in the wake of the pandemic, there has been a jump in the number of instances of employers choosing to fire and rehire workers.

According to research conducted by the Chartered Institute of Personnel and Development, between August 2021 and 2023, the proportion of firms that conducted fire and rehire almost doubled. What was once a seldom-used device has become a mainstream practice, and part of the wider pattern of growing insecurity at work. In short, it has become a first choice, rather than a last resort. A TUC investigation found that about 38,000 employers were still using fire and rehire as a tactic. However, when we were finally given the code that we were promised would tackle this Dickensian practice, we found instead a vague, weak and disappointing document that would not actually prevent another case as egregious as P&O. On that basis alone, the Government have failed to keep the promise that they made more than two years ago.

The element that many people found most offensive about the P&O case, which today’s motion seeks to address, is the fact that the P&O management were able to look at the sanctions for which they were potentially liable and then decide whether or not they wanted to abide by the law. In effect, the cost of breaking the law was considered to be just another business overhead to be factored into decision making, and, as we saw, the management decided that those sanctions were not a strong enough deterrent to prevent rule-breaking. In its response to the consultation, ACAS said that a 25% penalty

“may not always present a significant deterrent when calculated against the financial costs and risks of an alternative approach.”

[Sir John Hayes (South Holland and The Deepings) (Con)]

I raised exactly those concerns at the time in relation to P&O. The hon. Gentleman is making a powerful argument—and, incidentally, I congratulate the Minister on the motion—but the critical factor is the size of the business involved. A very large business can absorb all kinds of costs that a small local firm cannot. That has been the change, and the regulations that we put in place need to reflect that change, because otherwise those large businesses will behave with impunity.

[Justin Madders]

I will refer to other comments made by ACAS in response to the consultation, which I think will pick up some of the right hon. Gentleman’s observations.

We now have a clear indication that unscrupulous employers cannot get away scot-free with breaking the law, but there are concerns that a 25% uplift will not be enough to deter bad employers who are determined to do what they feel is necessary. Once P&O had calculated the maximum penalty that it could face in compensation for each employee, it priced that into its decision. In effect, it was able to treat the law on consultation—a law that is there to protect workers’ jobs and their dignity—as optional. Today’s motion means that breaking the law will remain an option; it just might be a slightly more expensive one now.

Laws are only as strong as their enforcement. We believe that sanctions should reflect the egregiousness of the transgression. If an employer decides to break the law, the sanction should not be capped, but instead should be decided on the basis of the facts. That would mean that any employers who were tempted to brazenly flout their legal obligations, having calculated the cost of breaking the law, would no longer be able to do so, because the cost of the sanction could, in the most serious cases, be much higher than the cost of complying with the law. Smaller transgressions would be treated accordingly by a tribunal. As things stand, the most egregious abuses have a cost ceiling, so those with ill intent can still price in the cost of acting unlawfully.

In its response to the consultation, ACAS said that there were

“grounds for considering whether additional or alternative financial disincentives might help…the government’s policy objectives”,

including

“greater uplifts of awards where this is just and equitable”

or

“where there are especially egregious breaches of the Code.”

It also suggested—this is relevant to the intervention from the right hon. Member for South Holland and The Deepings (Sir John Hayes)—that when deciding appropriate awards, courts and tribunals might be required to consider, for example, whether the employer ought to have known better than to breach the code, the degree of legal advice readily available to it, and its financial resources. We agree with those suggestions. The arrogant, uncaring and deliberate trampling of workers’ rights requires a stronger message from this place that those actions will no longer be tolerated. Bad employers should not be able to buy their way out of doing the right thing, but instead we see the status quo preserved.

Thankfully, many good employers understand the importance of working collaboratively with unions. We commend those employers, and we know that they already go above and beyond the legal requirements, but there is no evidence that the 25% uplift is likely to prove a deterrent to those who do not. The Government do not know how often the compensatory uplift is used in other areas of employment law where there is a similar penalty for transgressing a code of practice, which prompts us to ask on what basis it has been decided that this measure will be effective in preventing employers from failing to follow the code of practice.

We welcome the fact that the order extends the scope of compensation to any situation in which a protective award under section 188 of the Trade Union and Labour Relations (Consolidation) Act 1992 is applicable. I understand that to mean that more traditional redundancy situations will be covered, but there are limitations. There must be 20 or more employees at the same establishment for the obligations to be activated, which means that many smaller employers—and, probably more pertinently, many more employers whose workforce may be spread across many different settings, retail being an obvious example—can still be excluded. The measure also only protects “employees”, which means that some of the most insecure workers in the labour market will not benefit one jot; and, of course, the Government intend to reintroduce employment tribunal fees, which, as we know from experience, inhibit people from enforcing their rights.

The regulations also provide for a 25% reduction in compensation when an employee unreasonably fails to comply with the code of practice. During last month’s debate on the code, I asked the Minister what elements of the P&O case, or indeed any recent mass redundancy exercise, had led him to believe that such provisions were necessary. I am afraid that I did not receive a satisfactory response then, so I will ask the question again. Is it not the case that nothing in recent high-profile examples of fire and rehire redundancy has made it necessary to give tribunals the power to take away compensation from employees?

We will not oppose the motion, because it is a step, albeit a small one, in the right direction, but let me make it absolutely clear that what is before us will not prevent another case as egregious as that of P&O. It has taken us two years to reach this point—two years in which we have seen growing insecurity at work, and have come no closer to providing the protections that workers in this country deserve. When the Government committed themselves to responding to the outrage of P&O, there was a moment of consensus across the business world, across the political spectrum and indeed across the whole country that this disgraceful practice should be consigned to the history books. Epitomising that consensus, the then Business Secretary, the right hon. Member for Welwyn Hatfield (Grant Shapps), said:

“we will not allow this to happen again…where new laws are needed, we will create them…where legal loopholes are cynically exploited, we will close them, and...where employment rights are too weak, we will strengthen them.”—[Official Report, 30 March 2022; Vol. 711, c. 840.]

Those legal loopholes remain as open as they did two years ago, and there is nothing, absolutely nothing, to prevent the outrage of P&O happening again. That is yet another example of the long list of wrongs that will need a Labour Government to put them right. It is time to end the race to the bottom. It is time to end fire and rehire.

--- Later in debate ---

[Kevin Hollinrake]

I thank hon. Members for their contributions, and will address their specific points. As we have discussed this issue before in separate venues, I fully understand that the shadow Minister, the hon. Member for Ellesmere Port and Neston (Justin Madders), does not feel that this order goes far enough. It is interesting to consider the briefings that came from recent discussions in the Labour party about its new plans for the workplace. There was a briefing that the party accepted some situations where dismissal and re-engagement may be needed. That may be a vicious rumour, but it seems to me that those on the Labour Front Bench decide their policy on the basis of whom they have talked to last—whether that is a business, employers or employee representatives.

[Justin Madders]

We remain committed to banning fire and rehire, but if the Minister wants to debate our policies properly, let us have a general election and see what the public think.

Employment (Allocation of Tips)

Justin Madders Excerpts

Tuesday 14th May 2024 Commons Chamber

[Justin Madders (Ellesmere Port and Neston) (Lab)]

I thank the Minister for his introduction. Once again, I refer to my entry in the Register of Members’ Financial Interests. I also join the Minister in paying tribute to the hon. Members for Watford (Dean Russell) and for Ynys Môn (Virginia Crosbie) for their work on the private Member’s Bill that led to where we are today.

As the Minister outlined, we are finally here to debate the code of practice on fair and transparent distribution of tips, which is necessary to deliver the provisions of the Employment (Allocation of Tips) Act 2023. I say “finally” not just because it has taken a year since Royal Assent for a code to be agreed, but because it has been seven years since action was first promised on tips.

As far back as 2017, the Conservatives promised to ensure fair tips for hospitality workers. In that time, it is estimated that workers will have missed out on some £200 million a year in lost tips. That is over £1 billion taken from workers in some of the economy’s lowest paid jobs. It is a little disappointing to see that the Government have delayed the Act’s implementation from July until October 2024. By our calculations, this further delay will cost people in the hospitality sector another £50 million.

With that out of the way, I make it clear that we will not oppose the code. Action on tips is already long overdue, and we do not want to see it delayed any longer. We believe that these measures will have a positive impact on the lives of workers in the hospitality sector and other industries that frequently receive tips, but we also consider that there is room for improvement. I will refer to those specific issues in due course.

However, I start by referring to the Government’s consultation, which starkly set out why action is needed. The proportion of respondents who reported that they did not receive the tips to which they were entitled was very significant. Only half of those who completed the consultation reported that staff receive all the tips. Of course, this means that half the respondents to the consultation do not. Extrapolated across those working in the sector, around 1 million workers will benefit from this legislation. Of those reporting that staff do not receive all the tips, 21% reported that there was an administrative fee, another 13% said there were other deductions, and a staggering 11% reported that no tips were passed on at all. It is jarring that, in the face of such clear mistreatment of workers, there has been such a delay to get to this point. That the Government chose to delay the implementation of the Act after discovering the staggering statistics in the consultation rubs a little salt into the wound.

Some 73% of workers who responded to the consultation reported that their employer had not sought agreement on the allocation of tips, and 40% of employers consulted did not pass on tips to agency workers, in part or in total, which clearly needs to be addressed, and it will be by this legislation. These statistics may be a reason why we face another delay, because clearly a lot of businesses need to get up to speed in order to be compliant, which begs the question of why more has not been done before now.

Will the Minister outline the Government’s approach to working with businesses to ensure that they are aware of their obligations under the new laws? What steps will the Department take to ensure support in the areas where businesses raised concerns in the consultation, such as transparency and record keeping on tip allocation and distribution? I am particularly interested in how the Department plans to engage with small and medium-sized enterprises to ensure that they remain compliant with the law once it comes into effect. Workers will benefit only if employers are aware of and compliant with the law, so it would be welcome to hear the Government’s plans.

I draw the House’s attention to a couple of specific elements of the code. Paragraph 25, on employers consulting their workforce on the policy, seems pretty minimal in setting out what a good consultation looks like. If an individual makes an employment tribunal claim, does the Minister envisage there being any opportunity for there to be an examination of the quality of the consultation?

The very important point at paragraph 26 needs further clarification. It says that employers should review their allocation policy “on a regular basis”, but there is no indication of the timescale within which this should take place. Does the Minister have a view on what the timescale might be? We are dealing with a workforce who might change quite regularly.

That leads me to the question of enforcement. I repeat the old adage that people’s rights are only as strong as their ability to enforce them. The sector to which the Act predominantly applies is made up of workers in insecure, low-paid jobs that are generally in non-unionised workplaces. Staff turnover is high, meaning that many workers do not stay with the same employer, or even within the same industry, for long periods of time.

These factors will doubtless have an impact on workers’ ability to assert the rights afforded under the Act. Many may be entirely unaware of the stipulations of the Act. Even if they are aware of the stipulations, they might not always be aware of the ways in which they can enforce them. Particularly if the Government persist with their plan to reintroduce employment tribunal fees, it may well not be financially viable for people to assert their rights, as the fee for lodging a claim might well be more than a worker is seeking to claim back.

More fundamentally, a worker on a zero-hours contract or in another form of insecure work may fear that asserting their rights will be detrimental to their future chances of receiving work. For example, if a worker on a zero-hours contract is concerned that they have been underpaid the tips to which they are entitled and requests to view their tipping record, as is their right under the Act, their employer might consider this behaviour to be stirring the pot and choose to reduce the hours they give that worker, or possibly even to stop giving them work at all. A worker with less than two years’ service can be dismissed without cause and have no claim for unfair dismissal.

The legislation does not cater for people to claim that they have been unfairly dismissed for asserting their statutory rights under the Act. If that is the case, it is a huge oversight given that there is protection against unfair dismissal for asserting most other statutory rights. Will the Minister consider looking at this point again, as there is a real concern that, unless people have legal protection and confidence that the law is on their side, they may be reluctant to avail themselves of their rights.

In terms of the impact on the tribunal system, have the Government made an assessment of the propensity of those in the hospitality sector to take forward claims? Has modelling been done to judge the expected number of workers who will take forward tribunal claims?

It seems to me that the lack of proper protections will mean that the minority of bad employers will be able to continue operating with impunity, withholding the tips that their workers have rightfully earned. As a minimum, I would expect there to be some monitoring of the legislation’s effectiveness, perhaps through surveys or consultations. After all, paragraph 35 of the code states:

“An employer cannot be said to have met its obligation to handle tips fairly and transparently if individual workers are not aware of their entitlements in line with the tipping policy.”

If we are to have confidence that those words mean something, surely we need monitoring to ensure that the code is effective.

There are a couple of other issues that I would like to raise. First, on when a worker is entitled to receive their tips for a given month, the code makes reference to the provision that a tip must be paid by the end of the next month. There is a question about why tips are not passed over on the same schedule as most workers are paid.

Secondly, according to paragraph 13, tipping by app is judged to be out of scope of the legislation. Can the Minister confirm exactly what “tipping by app” means? I take it to be a form of digital tipping, akin to leaving cash, but we need some clarity. Will he outline what work the Department has done to identify the types of tipping practices that will be in scope? There is a concern that, although tipping by app might not be widespread now, it could be seen as a way to avoid obligations under the Act in certain circumstances, to prevent staff from getting the tips that were intended for them.

In summary, we welcome the fact that the Government have finally got to the stage of being able to implement this policy. Sadly, we will have to wait another five months for it to be implemented, but the changes set out today will have a positive impact on workers, who for too long have been losing money that was always intended for them. We will monitor the progress of this legislation closely and, if necessary, take further steps to ensure the good intentions behind this Act are delivered in full.

Paternity Leave (Bereavement) Bill

Justin Madders Excerpts

3rd reading
Friday 26th April 2024 Commons Chamber

[Justin Madders (Ellesmere Port and Neston) (Lab)]

It is a pleasure to speak on Third Reading of this important Bill, which has cross-party support, as we have heard. I congratulate my hon. Friend the Member for Ogmore (Chris Elmore) on his success in steering the Bill to this point. I am aware of how much work he has done with the Government to get their support and to ensure that the legislation can go through the other place and gain Royal Assent. I also recognise that the hon. Member for Broxtowe (Darren Henry) has worked constructively on behalf of his constituent, Aaron, and with my hon. Friend, to ensure that the legislation will be in place. He spoke movingly about how the tragic circumstances of his constituent, who lost his wife, Bernadette, moved him to take action.

A number of Members have noted the importance of this work. The hon. Member for Hyndburn (Sara Britcliffe) spoke about the work that she has done in light of the very tragic circumstances of one of her constituents. She showed how Members can work constructively—with the NHS in her case—to makes changes so that no one else has to go through the experiences that we have heard about. The hon. Member for Stoke-on-Trent South (Jack Brereton) spoke with great sincerity about why this legislation is so important.

As we have heard, the Bill as amended will disapply the employment conditions to which an employee’s right to paternity leave is subject in the event of their partner dying. In effect, it will make paternity leave a day one right for the partner of a mother who has died, with no continuity of employment test. The right is also extended to the tragic circumstances in which both mother and child die, despite the fact that paternity leave is usually taken only for the purposes of caring for a child. As we know, partners of mothers who die in or just after childbirth are not currently entitled to paternity leave if they have not met the continuity of employment requirements. That means that some people find themselves in the unfortunate position of not being entitled by right to paternity leave. If their employer chooses not to show compassion by voluntarily providing leave, an individual could be left grieving for their partner, as well as undertaking the mammoth responsibility of being a single parent to their child, without workplace support. Like other Members, I find it very hard to imagine how anyone could face such a devastating situation with the added pressures of job insecurity on top.

It is right to acknowledge that most responsible and caring employers would react to such a devastating scenario with compassion and do the right thing by their employee, regardless of whether any law required them to do so. However, making it a legal requirement will mean that the vanishingly small number of employers who do not act in that way will now have to and the employee has one less thing to worry about.

My hon. Friend the Member for Ogmore said that he wants the Bill to help as few people as possible. That is an unusual statement to make in this place, but it is an important point. Thankfully, the legislation will apply to few people because death during or just after childbirth is very uncommon. The excellent work that our midwives and doctors perform means that the number of mothers who sadly pass away within 42 days of birth stands at roughly 12 for every 100,000 births. Of course, each death is a tragedy and a profound loss, but we should recognise that those tragic circumstances occur in only a small number of instances. The fact that it has taken Aaron’s situation for the matter to come before us means that it is important that we act to prevent people falling through cracks because of legislative oversight.

As we know, at present the only right to statutory bereavement leave is for parents who have lost children up to the age of 18. Leave is a day one right, but the entitlement to pay is conditional on their having been in employment and earning a certain amount over eight weeks. Shared parental leave provisions also may not always help people in facing the situation that this Bill was originally drafted to help. Not only is there a time restriction on access, but income requirements can differ for the mother and partner. The system is rather complicated, and we know that families have been discouraged from taking up shared parental leave; figures show that only 2.8% of partners decide to take it up. As we have heard, by virtue of the amendments agreed in Committee, by using paternity leave rather than parental leave as the vehicle for entitlement, hopefully more people will be protected. It would also mean that the surviving parents of adopted children or children born through surrogacy arrangements will be included, and we welcome those changes.

I commend my hon. Friend the Member for Ogmore for working constructively with the Department and the Minister to achieve the desired outcome. I also note with interest the new powers in clause 1(4), which provide for the ability to introduce regulations to enhance redundancy protection for bereaved employees when they return from extended paternity leave, and to allow bereaved parents to have keeping-in-touch days during their extended paternity leave. It would be useful when the Minister responds to hear whether it is his intention to use those powers to introduce regulations. In particular, as my assumption would be, will the regulations be analogous to current paternity leave provisions?

In conclusion, we are pleased to see the Bill reach this stage, and we now wish it safe passage through to the other place. Again, I commend my hon. Friend for his work on it, and I congratulate him on getting the Bill to this stage.

Football Index Collapse: Lessons Learned

Justin Madders Excerpts

Wednesday 24th April 2024 Westminster Hall

[Justin Madders (Ellesmere Port and Neston) (Lab)]

It is a pleasure to see you in the Chair this afternoon, Mrs Murray. I thank my hon. Friend the Member for Blaydon (Liz Twist) for securing the debate and for the work she has done over a number of years to highlight this issue, as well as other existing or future problems that need to be tackled.

We know that Football Index has been described as

“the biggest scandal in British gambling history”,

with thousands of customers suffering cumulative losses of up to £134 million. It is a scandal and a failure. I am sorry to say that we are all getting rather too used to saying in this place that, once again, people have been let down. Whether it the sub-postmasters, the Women Against State Pension Inequality Campaign, the leasehold scandal, infected blood, the loan charge, mortgage prisoners, Equitable Life or the myriad other investment scandals that have seen people’s life savings stolen, too often in this place we end up saying that what happened was totally wrong and should not be allowed to happen again. But yet again that is where we find ourselves today.

It is little wonder that public faith in our elected representatives continues to erode when Parliament seems to be incapable of learning from past mistakes. Whether it is regulatory failures, loopholes or bad actors, this place seems unable to stop them. Consumer protection and other basic safeguards for our citizens seem to have gone missing in action. We are failing in our basic duties; light-touch regulation has clearly had its day. We know the terrible stories of those affected by Football Index—losses into seven figures, individuals driven to the brink of suicide, marriages collapsed, families torn apart and life savings vanished—and those impacts have been part of all the other scandals I mentioned. Too many people in this country have suffered grave injustices that we seem incapable of putting right.

Football Index has been described as a Ponzi scheme. As we have heard, its executives were warned soon after its launch—in fact, as early as 2016—that their so-called football stock market would prove unsustainable. All the warnings came some five years before its eventual collapse, leaving serious questions about how effective regulation was. According to newspaper reports, the Gambling Commission was warned in January 2020 that Football Index was

“an exceptionally dangerous pyramid scheme under the guise of a football stock market”.

We all know that that warning proved to be correct.

Perhaps it was the unusual nature of the product that meant it carried on without effective intervention. However, I have looked at Trustpilot reviews for many of the major online gambling companies, and there are a litany of tales about frozen accounts, withheld funds and appalling customer service. It seems that even the more straightforward gambling propositions are able to get away with far too much, so it should be little surprise when an unusual scheme, which was unsustainable by design, also escapes attention.

The FCA took its time to get involved, and was also indecisive, changing its view twice as to whether Football Index fell within its regulatory remit. On two separate occasions, in September 2019 and September 2020, when it did indicate that Football Index fell within its remit, the FCA did not follow up with adequate action, and the product continued to be unregulated.

Those who used Football index talked about it being advertised as an investment product, with only a very small note squirrelled away on its website saying that it was a betting scheme, which is what it really was. FCA regulation allows for redress for losses through the Financial Services Compensation Scheme, but because Football Index was considered gambling—although not overtly advertised as such—the failure to regulate it meant that the losses were allowed to continue to stack up.

The Gambling Commission has now updated its framework on how it assesses risks, so that the novelty of the product is fully considered. Licences will not normally be issued if the product’s name contains language associated with financial products. The FCA now has, I understand, an executive director to oversee its relationship with the Gambling Commission where products appear to cross boundaries. However, despite those actions, the reality is that nobody has been held to account.

Even those originally involved in the company have got away with it. The Insolvency Service, which I wrote to, decided there was insufficient evidence to justify directors disqualification proceedings. The people who created Football Index in the first place are allowed to carry on with impunity. That is wrong, because they knew it was unsustainable and they were warned about that from the very start, but they carried on anyway.

That leads us on to KiX, which my hon. Friend the Member for Blaydon mentioned. The KiX website says:

“Digital Athlete Tokens (DATs)…represent the on-pitch performance of individual footballers…and are deployed as smart contracts on the blockchain”.

It says that the owner of a digital athlete token becomes

“eligible for twice weekly winnings.”

I do not really know what that means, but it has a familiar ring to it—as we have heard, some of the people behind Football Index are part of KiX. That quote about digital athlete tokens means it is as clear as mud to me whether this should be regulated by the FCA or the Gambling Commission—perhaps it is neither. KiX is apparently a “decentralised autonomous organisation” and apparently has a

“decentralised, egalitarian and democratised blockchain ethos.”

If that word salad is not enough to put you off investing, I hope that someone, somewhere, who actually understands what that means is going to take responsibility for regulating this.

We have let people down, and these products need proper regulating and policing. We really do not want to end up here again in another few years, bemoaning our lack of action. I have had too many constituents ripped off by one investment scheme or another, and the lack of accountability, justice and—I am sorry to say—interest from those whose job it is to ensure that there is justice says to me that we are letting people down on a systemic basis. We have to do much better than we are at the moment.

Draft Code of Practice on Dismissal and Re-Engagement

Justin Madders Excerpts

Monday 15th April 2024 General Committees

[Justin Madders (Ellesmere Port and Neston) (Lab)]

It is a pleasure to see you in the Chair this afternoon, Sir Graham.

I thank the Minister for his introduction of the code of practice. It has taken more than two years, but we are finally here debating the action promised by the Government on dismissal and re-engagement. When the Government committed to introducing this code, there was a moment of consensus across the political spectrum that the situation we saw with P&O Ferries, which summarily sacked almost 800 workers over Zoom, could not happen again. The Business Secretary at the time, the right hon. Member for Welwyn Hatfield (Grant Shapps), said that

“we will not allow this to happen again…where new laws are needed, we will create them…where legal loopholes are cynically exploited, we will close them, and...where employment rights are too weak, we will strengthen them.”—[Official Report, 30 March 2022; Vol. 711, c. 840.]

Well, I am sorry to say that those legal loopholes remain as open today as they did two years ago, and there is absolutely nothing to stop the outrage of P&O happening again. Why do I say that? It is there in black and white in paragraph 12.3 of the explanatory memorandum to the code of practice, which says that

“the Code does not impose any new legal obligations and operates within the current legal framework”.

That, in the final analysis, is why this code of practice is such a let-down—another promise broken, another capitulation to the bad bosses and another reason why it is time for change.

It has taken two years to get to this point. In those two years, P&O has still been benefiting from Government contracts, and all the while, fire and rehire continues to pollute the country’s industrial relations landscape. While the P&O Ferries case was not wholly a fire and rehire situation, I will return to it later, because it bore many hallmarks of the practice and exposed the gaps in our laws designed to protect workers, where employers with deep enough pockets could use fire and rehire to disregard our laws.

In the wake of the pandemic, there has been a jump in the number of employers using fire and rehire. Research by the Chartered Institute of Personnel and Development found that between 2021 and 2023, the proportion of firms using fire and rehire had almost doubled. Many well-regarded household names attempted to do so, including Tesco, Clarks and British Airways. What was once a seldom-used device has become a mainstream practice and part of a wider pattern of growing insecurity at work. In short, it has become a first choice rather than a last resort.

[Kevin Hollinrake]

The hon. Gentleman raises P&O, which I must point out is specifically not a case of fire and rehire. What is the Labour party proposing to stop another P&O situation happening in future?

[Justin Madders]

I thank the Minister for his intervention, but we have been down this road before where he keeps asking what Labour’s policies are. My answer is, “Call a general election and we’ll have a debate about these things.”

[Kevin Hollinrake]

So you don’t know the plan.

[Justin Madders]

The Minister knows perfectly well where our policies can be found. The new deal for working people has been well advertised and well covered in the press. As he knows, there is a lot of support for our proposals to end fire and rehire.

As a TUC investigation recently found out, around 38,000 employers were using fire and rehire as a tactic. In that context, we need to scrutinise the draft code of practice and consider whether it will end the commonplace use of those tactics. I am afraid that, despite having had two years to get this right, we are no closer to ending the scourge of fire and rehire. The code of practice is vague, it is weak and in its final analysis, it will not prevent another case as egregious as P&O. On that basis, the Government have failed to keep the promise they made two years ago.

Let us take the element that many people found most offensive about P&O: the fact that at the outset, its management were able to look at the sanctions that they were potentially liable for and decide whether they wanted to break the law. The cost of breaking the law was considered as just another business overhead to be factored in when making decisions and, as we saw, P&O decided that the sanctions were not a strong enough deterrent to prevent rule breaking.

It is welcome that the code of practice gives an indication to unscrupulous employers that they cannot get away scot-free with breaking the law. However, we have concerns that the 25% uplift on awards at tribunals for employers who have been found to have unreasonably failed to comply with the code will not be strong enough to deter bad employers.

First, we have concerns about the inclusion of an award cap in the code of practice. As I have mentioned, it was particularly concerning that P&O was able to look at the options and perform a cost-benefit analysis of whether to conform with the law. It knew the maximum penalty it would face in compensation for each employee, which it then priced into its decision. In effect, it was able to treat the law on compensation—a law that is in place to protect workers’ jobs and their dignity—as optional. What the code of practice means, in effect, is that breaking the law remains an option, though it is now slightly more expensive than it used to be.

Laws are only as strong as their enforcement, so we believe that sanctions should reflect the egregiousness of the transgression. If an employer decides to break the law, their sanction should not be capped but should instead be decided on the basis of the facts. That way, any employer tempted to brazenly flout their legal requirements would no longer be able to calculate the costs of doing so, because in the most serious cases that cost would not be knowable and they would have to take their chances in court. Smaller transgressions would be treated by a tribunal. As it stands, the most egregious cases still have a ceiling, which means that those who act with ill intent can still price in the cost of acting unlawfully.

The code of practice therefore retains the status quo, whereby an employer can look at the maximum fixed penalty associated with breaking the law and, in effect, choose whether they will abide by it. It is workers who suffer the consequences. Some bad employers might see consultation requirements as burdensome, but there is a reason why the law requires consultation.

The consultation process is a vital opportunity for the voices of workers and their representatives to be heard, and for alternative proposals to be put forward to save jobs and protect conditions. When consultation works best and is meaningful, it can benefit employers and employees. There are, thankfully, many good employers who understand that and work collaboratively with trade unions. We commend those employers, and we know that they already go above and beyond their legal requirements. However, this code of practice needs to be set in a robust framework for bad employers, who sadly are out there. Frankly, there is no evidence that the 25% uplift will act as a deterrent.

I would like to hear what the Minister has to say about that, because I do not know how he can confidently assert that a 25% uplift will actually prove to be a deterrent. In response to my written question about the use of compensatory uplifts by employment tribunals, he said:

“Data on the use of compensatory uplifts by Employment Tribunals is not collected.”

That means that the Government do not know how much the compensatory uplift is used in other areas of employment law where there is a similar code of practice. That gives rise to the question: on what basis has it been decided that this measure is effective in preventing employers from failing to follow the code of practice? Does the Minister have evidence of its effectiveness that he can share with us today?

It is also worth reminding Members that this deterrent will not come into force straightaway. As the Minister indicated, secondary legislation is required to amend section 207A of the Trade Union and Labour Relations (Consolidation) Act 1992. He said that that will be introduced this summer. Will he confirm whether that means before the recess or at a later date over the summer? It would be useful to get a date for the introduction of that secondary legislation.

It must also be pointed out that under the current drafting of the code, the sanctions can be awarded only if an employee has been found to have been unfairly dismissed. We know how easy it is for an employer to dismiss a worker in the modern economy. Of course, generally speaking, those with less than two years of continuous service cannot be considered to be unfairly dismissed. Some may sign settlement agreements that offer them their statutory entitlement, but a hard-nosed employer may say, “Well, if you want to argue for an extra 25%, take your chances at a tribunal,” where the cost to the employee might be more than the potential sum to be gained.

On top of that, the code of practice protects only “employees”, meaning that some of the most insecure workers in the labour market will not benefit one jot. To add icing to the cake, or salt to the wound, the Government intend to reintroduce employment tribunal fees, which we know from experience have a significant impact on people’s ability to enforce their rights. Will the Minister provide an assessment of how many people will benefit from this code of practice, and how many employers he believes will not use fire and rehire as a result of it?

Paragraph 14 of the code refers to a 25% reduction in compensation where the employee—not the employer —unreasonably fails to comply. Is it the Government’s intention to give tribunals the power to reduce employees’ compensation in fire and rehire cases, and if so, what element of the P&O case led the Minister to conclude that that was necessary? As the TUC pointed out, the uplift does not cover redundancy situations. As we know, P&O was in part a redundancy situation, where surely the same sanctions should apply. Will the code apply where workers are replaced with agency staff?

Turning to the substance of the guidance, I have made the general point that, as is clear from the explanatory memorandum, the code creates no new legal obligations. That is sadly reflected in the number of times that the code says that an employer “should” rather than “must” do something. I will not list every example—I appreciate that people have other places to be—but there are some important instances where “should” comes in, such as paragraph 16, which says that the employer “should” consult in good faith. Paragraph 23 says that

“the employer should consider what information could be provided about…the proposed changes”.

Paragraph 28 says that the employer

“should genuinely consider the points that are put forward”,

and paragraph 31 says that

“a threat of dismissal should not be used as a negotiating tactic”.

On the last of those, why not say that the threat of fire and rehire “must” not be used as a negotiating tactic? I am pretty clear that that is what Ministers had in mind when they made those promises two years ago. Why is it a requirement only that an employer “should” consult in good faith? Surely we want every employer to consult in good faith; there should be a legal requirement for them to do so.

[Kevin Hollinrake]

There should be.

[Justin Madders]

Employers should do, yes—and that should be enforced in law.

There is a similar issue with the guidance offered in the code on the provision of information and how to conduct consultation with workers. Instead of clearly and unambiguously stating what information employers ought to provide, the code relies on the phrase “as reasonably possible” on numerous occasions. Instead of providing concrete guidance on the timeline of providing information, paragraph 21, for example, simply states:

“Information should be provided as early as reasonably possible.”

Similarly, paragraph 22 states that

“employers should share as much information regarding the proposals as reasonably possible”

in order for employees and their representatives to understand the plans and ask questions. Section D on consultation states that an employer should

“genuinely consider any reasonable alternative proposals”

and should

“consult for as long as reasonably possible in good faith, with a view to reaching an agreed outcome”.

Those statements are not really anything other than restatements of the existing legal principles on consultation, and the repeated references to “should” rather than “must” mean that in reality, the code does not strengthen protection for workers at all.

Insomuch as there is concrete guidance about the provision of information, I suggest that it is insufficient. Paragraph 23 lists the information that could be provided, such as the proposed changes, who will be affected, the business reasons for the changes, the timeframe, any other options considered, and next steps, but those are not the only pieces of information that unions or other representatives will require to propose truly viable alternatives to fire and rehire. It is unclear why the Government have chosen not to be more prescriptive with the types of documentation that could be provided. The TUC recommended that the list be expanded to include information similar to that set out in paragraph 11 of the ACAS code of practice on the disclosure of information to trade unions for collective bargaining purposes. That would mean that unions and other representatives could get sight of more information about a number of elements relating to staff, including productivity and efficiency data.

Perhaps most importantly, financial information would also be available—cost structures, profits, assets, liabilities and forecasts—which would help to formulate a credible alternative plan. In particular, financial information would help those representing the workforce to determine whether the financial position of the company was such that some sort of action was justified, as opposed to the situation that we often see in fire and rehire, where the company is making a healthy profit on the face of it but refers to vague and sometimes intangible reasons for the proposed changes. It may even refer to something as vague as

“the strategic direction of the business”,

which is mentioned in the first paragraph of the code of practice.

Choosing not to include that level of prescription in the code will limit the ability of unions and other representatives to suggest ways to avoid fire and rehire. Indeed, what we are presented with in the code of practice is perhaps the exact opposite of what ought to be best practice.

In particular, paragraph 27 of the code gives employers the opportunity to withhold information should they believe it to be commercially sensitive. The employer alone decides what to disclose, so they can hide behind that catch-all paragraph to keep whatever they want private. Yet the sharing of confidential and commercially sensitive information is commonplace in good industrial relations, and it can be the basis of a shared conversation to find a solution, particularly in cases of fire and rehire, when access to documents such as financial forecasts is critical to unions being able to assess the firm’s position and suggest viable alternatives. Instead of encouraging employers to withhold such information, as the code of practice does, it should suggest ways to facilitate the sharing of sensitive information. The code could easily have talked about circumstances in which it would be appropriate to disclose such information to the appropriate reps, perhaps on the condition of confidentiality, but it chooses not to.

Another glaring omission is the lack of clear and concrete guidance as to how to conduct an effective consultation process. There are comments that remind employers to conduct a meaningful negotiation and process, but no guidance on how to actually go about it. In its consultation response last year, the TUC suggested that the relevant section should include practical guidance about how to go about conducting an effective process. It recommended that there should be guidance on the exchange of written information, including responses to demonstrate that employers have actively considered alternative proposals. Those are the standards that we want to see in a good and effective consultation process. Of course, most employers want to do their best, so why shy away from providing that level of detail?

Instead of paying lip service to the idea of conducting a meaningful consultation, more practical guidance could drive up standards and ultimately improve the outcome of the consultation process. That is far beyond what is included in the code of practice. In fact, paragraph 25 states that the provision of information in writing is not even an obligation, but just “good practice”. Are the Government really saying that the information in consultation exercises does not have to be provided in writing? That sums up the failings evident in the section of the code of practice that deals with information and consultation. It is vague, it is weak and it does not encourage employers to make the most of the opportunities to avoid imposing changes on their workforce.

I want to say a few words about the advice in the code of practice that fire and rehire should be used only as a last resort. The code of practice is clear that it does not mean a last resort in the sense that there is no alternative to the action other than insolvency or redundancies, for example; rather, the suggestion is that it can be used as a last resort if negotiations are not successful. In practice, that means that employers can, as they do now, use the most spurious of reasons for proposing fire and rehire, but as long as they can show that they have attempted some consultation, they can still do it.

That brings me to the question of what an employer will be expected to produce to show that it considers its decision to fire and rehire as a last-resort measure when consulting unions and, indeed, when the matter is taken to a tribunal. Will that include anything to do with the disclosure of financial records, business forecasts or accountancy advice? In the absence of such information, how will unions be able to differentiate between employers considering dismissal and re-engagement as a genuine last resort and those that use it as a scare tactic? These fundamental points should have been addressed in the code of practice.

The original code of practice contained a whole paragraph that stated that, before making the decision to dismiss workers,

“the employer should take some time to reassess its analysis and consider carefully again”.

It listed conditions such as whether it was “truly necessary” to impose the new terms, whether any

“alternative options…could achieve those same objectives”,

and whether the changes would impact those with protected characteristics. In other words, it set out a much more thorough process than we have ended up with in the final version of the code of practice.

The removal of those requirements can be seen only as a capitulation to the interests of bad employers who disliked the idea of having to re-examine their business case to make sure that the imposition of changes was absolutely necessary. The consultation response notes:

“Some respondents indicated that re-examination would be overly burdensome for employers, suggesting a lighter-touch approach with employers reviewing only specific proposals, rather than their entire business strategy.”

I do not think that language sends out the message that fire and rehire is a last resort. It would be helpful if the Minister took the opportunity to explain why the decision was taken to water down the requirements in the original draft code of practice.

It seems clear to me that the changes reflect more of an intent to reduce concerns about the code being burdensome on business than an intent to protect workers from having new terms and conditions imposed on them. I suggest that those are not the actions of a Government intent on curbing the use of fire and rehire. We were clear that the original draft would fail to do so, but now that the draft has been further watered down it seems even more ill-equipped to deal with the scourge of fire and rehire.

Finally, the Minister will be aware that the P&O case led to a report and recommendations by the International Labour Organisation’s committee on freedom of association. That report came out at the end of last year. Can the Minister update us on what actions the Government have taken in response, and whether they intend to implement all the ILO’s recommendations?

What we have before us is a code of practice that fails to deal with the fundamental reason for its creation, which is to stop another case as egregious as that of P&O. It has taken two years to get to this point, yet we are no closer to the protections that workers in this country deserve. The code of practice represents a missed opportunity to right the very real wrongs that we have seen up and down this country for far too long.

--- Later in debate ---

[Gavin Newlands]

Of course I would suggest criminal sanctions to end such practices. The Minister is right to say that P&O did not use fire and rehire in the strictest sense, but there were elements relating to fire and rehire. In a sense, it was fire and replace. Those staff members were replaced by cheaper foreign workers. That is the truth: the jobs were not redundant. If I were to bring forward another law, I would ensure fire and replace were also made illegal in circumstances such as those at P&O. As it happens, fire and replace is not new; it was actually proposed back in 2002 by one Tony Blair during the firefighters’ pay dispute.

We have a real problem around employment rights in the UK. The balance has been tipped over the last four and a half decades far too far towards employers and away from ordinary women and men who need the protection of the law against what is thankfully the minority of unscrupulous employers. Forty-five years of continual assault on workers’ rights has left millions essentially at the mercy of bad bosses, or subject to the gig economy and classed as “contractors” by multinational corporations desperate to avoid taking any responsibility for them and their or anyone else’s welfare.

Those lost decades need to be reversed. Sooner or later, the UK parties have to realise that workers’ rights are a fundamental part of building a stronger economy. It is no coincidence that virtually every country in Europe has stronger workers’ rights and better protections for their workers, and also enjoys higher living standards and a more robust, more diverse economy and social infrastructure.

Unfortunately, I do not hold out much hope for an improvement after the next general election. I know that there are many, many good people in the Labour party—including in this room—but the Leader of the Opposition has shown little interest in workers’ rights. I am still waiting for a response to my letter asking for his support of my Bill to ban fire and rehire, and the slew of shadow Ministers proclaiming their admiration for Margaret Thatcher do not inspire much confidence that they will roll back her and her descendants’ attacks on workers’ rights.

[Justin Madders]

Will the hon. Gentleman give way?

[Gavin Newlands]

Of course. I thought the hon. Gentleman might want to intervene.

[The Chair]

Order. Before the hon. Gentleman takes the intervention, let me say that we are here to debate the draft code, rather than what may or may not happen after the general election or what happened 45 years ago.

[Justin Madders]

I understand what you say, Sir Graham, but I cannot let those comments go without a response. I just want to point out to the hon. Gentleman that the leader of the Labour party has promised that legislation on employment law will be introduced within 100 days of a Labour Government taking power. If his party is so keen on employment law, why did less than half of his colleagues vote for the private Member’s Bill to devolve employment law to Scotland?

[Gavin Newlands]

I thank the shadow Minister for that intervention, which did not surprise me. Nor did your point, Sir Graham—God forbid a lot of the politics enters the fray. It is a bit rich for the Labour party to talk about devolving employment rights when, as members of the Smith Commission, it was the Labour party that vetoed the devolution of employment law to Scotland. It would be devolved to Scotland if it were not for the Labour party, so it is unbelievable that that would be cast up in this way.

I say this in all sincerity: I genuinely hope that I am wrong about the lack of enthusiasm from Labour and the Leader of the Opposition for radical change of the status quo if they come to power. But I do know that I am right about the lack of ambition shown by the current Government and this code. Support is far too strong a word, as perhaps the Committee can gather from my remarks, but we will not oppose the code on the basis that it is slightly better than nothing. It would be nice to come to one of these Committees one day and be pleasantly surprised by the Government’s ambition, rather than despairing over their lack of it.

I was going to conclude with questions for the Minister, but the shadow Minister, the hon. Member for Ellesmere Port and Neston, asked all my questions and more. For the benefit of Committee members I will not repeat them, but I look forward to the Minister’s response.

--- Later in debate ---

[Kevin Hollinrake]

What that business leader did was disgraceful. We impose criminal sanctions on employers very cautiously because we want people to invest in our economy. That is hugely important. We make changes in employment law at our peril. It needs to be balanced between the needs of employers and employees.

[Justin Madders]

Will the Minister give way?

[Kevin Hollinrake]

Perhaps the shadow Minister will answer this question as part of his intervention. In The Telegraph, Archie Norman, one of the foremost business people in this country, who has done tremendous work in making sure that people have good employment opportunities, described Labour’s potential package in the area of employment law and the changes the party intends to make. He said that the changes would reduce flexibility, make it more costly to hire people, deter people from entering the workplace and deter investment. Perhaps the shadow Minister will address Archie Norman’s criticisms when he intervenes.

[Justin Madders]

I could, but I fear that Sir Graham might say I am out of order. It comes as no surprise that a former Conservative MP would want to prevent the extension and strengthening of workers’ rights. The Minister said that there is no room for criminal law, but is it not the case that his Government referred the matter of P&O Ferries to the Insolvency Service for potential criminal proceedings?

[Kevin Hollinrake]

Yes, corporate criminal proceedings, not individual criminal proceedings. I think that what the hon. Member for Paisley and Renfrewshire North refers to is individual criminal sanctions, which would be disproportionate. If the hon. Member for Ellesmere Port and Neston thinks that a Conservative politician is only on the side of the employer, I do not think he has met Archie Norman. Perhaps he might benefit from a meeting with him. He is a very considerate employer who understands the need to treat employees right as well as make sure the framework is right for business in this country.

The hon. Member for Ellesmere Port and Neston asked why the 25% uplift would prove a sufficient deterrent. Clearly, it is a deterrent, because it is more than an employer would have to pay if they go through the simple process of consulting their workforce. I might describe it as bleeding obvious. The actual impact remains to be seen, but we certainly think it is a significant deterrent. The hon. Gentleman asked whether it will be implemented before, within or after the summer recess; we are intending to do so before the summer recess.

The hon. Member for Ellesmere Port and Neston also asked about these provisions applying only to employees with two years’ service. He is right to say that generally, unfair dismissal rights are around only after the first two years, unless there is something like discrimination, for example. I know the Opposition are seeking to change this in their proposals, which we think is disproportionate and wrong. In a collective situation, however, there are circumstances where people who have been in the workplace for less than two years are covered.

On the point about “should” and “must”, we are dealing here with provisions that will be heard before a court. A court can make the judgment, of course, on whether somebody has done the right thing. I think “should” is the right kind of phrase to use in that situation, because a judgment is made and the tribunal can award up to 25% on top of the normal financial requirements if an employer unreasonably fails to comply with the code. That joins the circle, in terms of making sure that this code is effective when people go before a tribunal.

The hon. Gentleman asked about the ILO. We are carefully considering the committee on freedom of association’s recommendations, and will provide information to the ILO in due course.

The hon. Gentleman also asked about some of the changes and said that they have been watered down, but that is not the case at all. We did make changes following consultation, and did some reordering to make it more straightforward, which was based on feedback we received. We also made changes suggested by trade unions, including saying that employers have to speak to ACAS before raising fire and rehire, and adding the award to claims that can attract 25% uplift for non-compliance.

[Justin Madders]

In the Government response to the consultation, there are some lovely pie charts showing the responses.

[Kevin Hollinrake]

Thank you.

[Justin Madders]

I am glad the Minister has been looking at the artwork. A large proportion of responses —sometimes as high as 40%—to the question, “Do you agree?” are categorised as “unspecified”. Is the Minister able to explain what that covers?

[Kevin Hollinrake]

Not off the top of my head, but I am happy to confirm it via separate means.

The hon. Gentleman also said that the code should be more detailed in specifying exactly how a consultation might take place. We think that would be the wrong approach, and that the employer is the right person to determine that, in terms of how he or she consults members of their team. We did not want to get a very lengthy code that would naturally result in being too specific about exactly how that consultation should take place. I think I have covered all the points raised by the hon. Gentleman; he can intervene on me if I have missed anything.

[Justin Madders]

I have just one small point. The code of practice referred to compensation being reduced by 25% for employees not compliant with the code. Is the Minister able to confirm whether it is the intention for that to apply in this case?

[Kevin Hollinrake]

I do not quite understand the hon. Gentleman’s question. Perhaps we can have a discussion about that afterwards.

To conclude, we are taking robust and appropriate action in this area. We believe that a statutory code of practice is a proportionate response to dealing with controversial fire and rehire practices. The code will address the practice of fire and rehire, aiming to ensure it is only ever used as a last resort, and that employees are properly consulted and treated fairly. It clarifies and gives legal force to accepted standards about how employers should behave when seeking to change employees’ terms and conditions. Employment tribunals will have the power to apply an uplift of up to 25% of an employee’s compensation if an employer unreasonably fails to comply with the code where it applies. Subject to approval by this House, the code will be in force later this summer, prior to recess, and I hope Members will support it.

Question put and agreed to.

Resolved,

That the Committee has considered the draft Code of Practice on Dismissal and Re-Engagement.

Draft National Minimum Wage (Amendment) (No. 2) Regulations 2024

Justin Madders Excerpts

Monday 18th March 2024 General Committees

[Justin Madders (Ellesmere Port and Neston) (Lab)]

It is a pleasure to see you in the Chair this afternoon, Mr Hosie. I thank the Minister for outlining the changes these regulations make to implement the new rates of minimum wage, as recommended by the Low Pay Commission, to which I also pay tribute for its sterling work. I will refer to some of the findings from its annual report during my contribution.

I also—he should really steel himself, because I do not do this often—congratulate the Minister on delivering the promise to match the minimum hourly rate to two-thirds of median wages. I think that has been eight years in the offing, but we have got there. In achieving this figure, the Low Pay Commission recommended a rise that represents the largest increase in cash terms since the introduction of the minimum wage. That is clearly welcome news for those working in minimum wage jobs, as is the extension of the entitlement to all those over the age of 21. It represents a 9.8% increase for those older than 21, with the hourly rate of the main rate—the so-called national living wage—now at £11.44 an hour. That equates to an annual increase of just over £1,800 for someone working a 35-hour week, and clearly we in the Opposition welcome that.

While I understand the Government are keen to celebrate this year’s levels, I would caution them not to be too overconfident, because anyone who has taken the time to study the Low Pay Commission’s report will see that much more needs to be done before work in this country pays in the way that it should. There are clear warning signs in the report about the persistence of insecure work and in-work poverty.

No one here will need reminding that the rates of inflation we have had to endure in recent years have thrown workers—and, indeed, everyone in this country—into a cost of living crisis. Inflation rates peaked at 11.1% in October 2022 and have been hovering around 4% and 5% even now. Between April 2021 and April 2022, household bills doubled, and the price of essential goods and services increased at a magnitude not experienced since the 1970s and 1980s. The Low Pay Commission report notes that energy, food and transport costs were at the “highest rates recorded” since the CPI series began, way back in 1989. Even in September last year, when inflation was beginning to come down, energy prices were still increasing by 5% and food inflation was 12.2%.

Last year I raised concerns that, in the face of such high levels of inflation, the minimum wage uplifts were not large enough to prevent a real-terms cut to the rate. That has been confirmed by the Low Pay Commission report, which states that the past two years’ increases in the minimum wage have in fact represented a cut in real terms due to inflation. I am pleased that the commission is confident that today’s increases will restore the value of the minimum wage in real terms, but I am also aware that the increases do not undo the previous two years, when pay did not keep up with the cost of living and hardship has endured as a result.

[Kevin Hollinrake]

As I said, the national living wage has outstripped inflation twofold during the period since its implementation. At one point in time, the Opposition talked about a national living wage of £15 an hour. Is that still the hon. Gentleman’s policy? Is that his personal policy or the Opposition’s policy?

[Justin Madders]

That very interesting question is some way outside the remit of the regulations. Of course, if the Minister wants to talk about what our policies will be, he should advise the Prime Minister to call a general election—but perhaps we are not quite there.

My question for the Minister is about the inflationary spikes of the last couple of years. What mechanisms are being looked at to ensure that the minimum wage increases at a rate that reflects those in real time? The evidence gathered by the Low Pay Commission on how workers have been affected is truly sobering. In Belfast, the commission found that supermarkets had introduced payday pantries, which provide food for workers in the run-up to payday. A care worker in Manchester told the commission,

“Most of my colleagues are using food banks.”,

and stated that that was not a new, post-pandemic problem. Such examples chime with responses in trade union surveys. In autumn 2022, Unison found that 17% of respondents had skipped meals and that 20% had asked for a loan from family or friends. In May 2023, USDAW found that 46% of its members surveyed were worried about food bills, 15% had turned to food banks and 42% had missed meals in the last year to pay for bills. If anything, the situation has been getting worse. The Joseph Rowntree Foundation’s yearly poverty report states that the proportion of households in poverty with at least one working adult increased from 61% in 2021 to 64% in 2022. The poverty rate across the country as a whole is now more than one in five, and poverty has not fallen for 20 years.

It is worth saying a few words about why, despite the Minister’s comments, minimum wage increase have not eradicated in-work poverty, which is what we would like to see. Of course, I commend the Government for reaching their 2016 pledge to increase the minimum wage to 60% of median wages by 2020 and to two thirds of median wages by this year. Indeed, the impact has been that the number of employees on low hourly pay has fallen consistently; the fall since 2015 is estimated to have been about 20%.

However, the graph on page 62 of the Low Pay Commission report reveals that on two issues we still have an awful long way to go. It is hard not to be struck by the large disparity between men and women in terms of low pay—a point I shall return to—and the persistence of low weekly pay as opposed to low hourly pay. That instructive graph shows that increasing the minimum wage floor is only one of the tools needed to tackle problems in the labour market, and that it has largely left unaffected the issue of low pay for those on weekly earnings. There is clearly an issue about the number of hours people are working.

The Low Pay Commission annual report highlights the wide gap between men and women. Consistently since 2011, roughly 15% of men in employee jobs have been on low weekly pay, despite the increases in the minimum wage. The percentage of women on low weekly pay is double that of men, at roughly one in three. That has fallen gently since 2011, when the rate was around 41%, but that large disparity is still there. Will the Minister say whether there are any plans to deal with that gender pay gap and the question of hours worked?

To adequately address the problems in our labour market, we have to consider not only the number of hours but the quality and insecurity of work. Citizens UK has estimated that there are 6.1 million workers currently trapped in insecure forms of work, 3.4 million of whom are on low pay. That amounts to 19% and 11% of the total workforce respectively on low pay. Low pay is not an inherent condition for those in insecure work, however; those on low pay are around five times more likely to be in insecure jobs.

It is noted in the Low Pay Commission’s report that those insecurely employed struggle to get adequate hours, still receive late shift notices and are on zero-hours contracts. Respondents noted that workers in sectors such as hospitality had to take on multiple jobs to obtain full-time hours, which brings the challenge of having to juggle their availability in order to be accessible for both.

In its fieldwork, the Low Pay Commission found that workers continue to struggle to get contracts that reflect their actual hours worked. It was also noted that employers are still allocating shifts with as little as a day’s or just a few days’ notice, with some workers interviewed even stating that they had had shifts cancelled on the day they were meant to be in work. That is clearly a problem that is not going away. I ask the Minister this: how is someone supposed to plan for the future when they do not know how many hours they will work from week to week or month to month? What can a worker do if they are told they are surplus to requirements on a particular day when they might have already paid out for childcare or transport costs? Such practices erode the gains that we have made on the minimum wage.

As I say, I will not be entirely negative—the Minister would not expect me to be so. Positive steps have been made this year. We particularly welcome the removal of the 21 to 22-year-old age category. That measure was found to have broad support among those contacted by the Low Pay Commission. But as I mentioned last year, we are sad to see the Government continuing to support age discriminatory bands for those over the age of 18. Why should someone’s age determine their pay? A young adult is unable to go to their landlord and demand lower rent or to tell the cashier at the supermarket that they should have a discount because they are under the age of 21. Their bills are no cheaper than anyone else’s, yet for some reason we expect young people to make ends meet on lower pay.

That is accentuated by the fact that the rates have grown more slowly for younger workers. The gap between the main rate and the 18 to 20-year-old rate has grown massively since the Conservative party came to power in 2010. The Low Pay Commission report shows how the 18 to 20-year-old rate hovered around 85% of the value of the adult rate throughout Labour’s time in office. It then fell to below 80% between 2011 and 2013 and has continued to fall since 2015.

The minimum wage rate now for those aged 18 to 20 is just over 70% of the adult rate—around 15% lower than it was under the Labour party, rubbing salt into an already unjust situation. I appreciate that the Minister has referred to an above-rate increase for 18 to 20-year-olds this year, but is that part of a concerted plan and strategy to bring back the differential that existed under the Labour Government?

Eligibility is only half the battle. Unfortunately, entitlement to a minimum wage does not translate directly into securing that rate of pay. Enforcement is key and the right to be paid a minimum wage remains an important part of the enforcement universe. Questions, therefore, ought to be asked about the effectiveness of enforcement, as too many workers still report being underpaid.

Data from the annual survey of hours and earnings shows that, despite the total number of people reporting being paid less than the minimum wage having fallen since 2019, last year 365,000 workers were still being underpaid by their employer. As a share of the minimum wage coverage, that has increased since 2019, at a rate of 23.4%. That means that of those who earn on or around the minimum wage, around a quarter of them are not actually receiving it. That is certainly something that we need to see more action on.

From what we have seen from the Low Pay Commission’s report, workers in certain sectors are impacted more than others. I spoke last year in the same debate about the impact in the social care sector and raised the findings that Unison had shared with me about the exploitation of domiciliary care workers. I mentioned then that 73% of those workers were being underpaid. They were not being paid for the travelling time. I also stated that record keeping by employers was found to be way below the standards expected and that the complexities of those pay calculations made it incredibly difficult for employees to establish whether they had in fact been underpaid.

It was therefore pleasing to see that the Low Pay Commission had dedicated some space in its annual report this year to discussing those issues. It noted that the amount of arrears that His Majesty’s Revenue and Customs recovered for non-payment of the minimum wage

“pales into insignificance when compared to the average amount of arrears that Unison secures”

for social care workers—well done to the trade union Unison, but should it not be HMRC’s job to recover arrears and ensure the minimum wage is paid properly in the first place? Is it the case that HMRC is unable to properly decipher the records, or is it going lightly on social care employers?

[The Chair]

Order. I know that the Low Pay Commission report and recommendations are in the paperwork we have been given, in the impact assessment, but enforcement and so on are slightly wide of the scope of this very narrow SI, which is simply about a change to rates. I am sure the shadow Minister will reflect that in his soon-to-be brief closing comments.

--- Later in debate ---

[Justin Madders]

I understand what you say, Mr Hosie, but this is the only occasion we get to debate the Low Pay Commission report and, as you correctly point out, it is instructive in setting the minimum wage. I will, of course, be guided by your comments.

I will just say a little more about the naming and shaming scheme. I am pleased to see that we have managed to get two rounds of it in the last year. However, one problem is that we are talking about historical breaches—one of them in the last round was from 2012. There are evidently problems with the naming and shaming system. Employers that do not pay the minimum wage must feel that they will face the obloquy of the naming and shaming scheme quickly—much more quickly than they do now. When will the Minister be able to update us on how the enforcement and naming and shaming schemes will be operating faster?

I will skip over the questions on procurement that I raised last year, Mr Hosie, but I want to raise a couple of final points mentioned in the Low Pay Commission report. One was about the number of commissioners. There has been a gap in that number, and the commissioners expressed some frustration that they were not at their full complement. I think there is still a vacancy on the commission. Can the Minister update us on when that is likely to be filled?

Finally, the commission noted that the labour force survey was becoming less reliable. What plans does the Minister have to ensure that in future, when the Low Pay Commission is setting its rates, it can do so on the basis of a robust dataset? I recognise that he has made comments about the remit being issued for 2024 shortly, but it is probably lacking a little bit of detail. Does he have anything to share with us about the Government’s plans and ambitions for raising the minimum wage in the next decade?

--- Later in debate ---

[Justin Madders]

On the Minister’s point about how the minimum wage has increased over the past eight years, why is it still the case that so many people are in in-work poverty? How many people have actually made that request for predictable hours under the legislation?

[Kevin Hollinrake]

There has been a significant decrease in the number of people in absolute poverty—millions of people since 2010 and 400,000 fewer children in absolute poverty, which we all welcome. As I said before, in pushing the national living wage as high as we have done, we are putting burdens on businesses. We want to ensure that we strike a balance, and that is our concern with this. We always take into account the concerns of employers as well as workers.

[Kevin Hollinrake]

My right hon. Friend is right to say that part of the rationale behind the national living wage is to ensure that wages that employers pay are not being subsidised. The total cost of the welfare system is around £303 billion, some of which is a result of the issue he raised. To me, that is wrong and that is one of the reasons why we would like to see the national living wage increased. Nevertheless, we do not want to see that at the detriment of jobs in our economy.

There is still a balance to be struck on making sure people have the opportunity for predictable hours. That is covered in the legislation we have introduced. I understand that the policy of the hon. Member for Ellesmere Port and Neston is that anybody who has been in work for 12 weeks and is on a contract can request those hours in terms of as a permanent position. I think that is the policy that the Opposition are going to introduce. It will be interesting to see what impact that will have on employers, particularly employers of seasonal workers.

There is a balance to be struck between business and workers. I point out that there are 4.2 million more jobs in our economy than there were in 2010. That is a huge success story. There are 1.2 million fewer people unemployed and looking for work. That is a huge achievement. Some of the policies that Labour always tend to bring forward end up costing jobs. Every single time we have had a Labour Government, unemployment is higher at the end of their term than it was at the start.

[Justin Madders]

Is the Minister aware that an election is about to be called, because he has spent the last couple of minutes talking about Labour policies rather than the statutory instrument? If he is so convinced that our policies are bad, why won’t he let the public decide?

[Kevin Hollinrake]

I am purely responding to the points that the hon. Gentleman raised, to try to make him understand there is a balance to be struck in the economy between jobs and pay. That is the balance we are trying to strike.

The hon. Gentleman and the SNP spokesman, the hon. Member for Glasgow South West, made points about enforcement, which we take very seriously. We have doubled the compliance budget between 2015-16 and today to £27.8 million. We have ordered employers to reimburse £100 million to 1 million workers. We take this very seriously.

The naming and shaming scheme was suspended during covid. I understood why, but I was very keen to reintroduce it. It is the principal deterrent. I reassure the hon. Member for Ellesmere Port and Neston and other members of the Committee that, whenever we are about to do a naming round, we write to all the employers and tell them that they are going to be named. We get a lot of push-back, and we push right back again. There is no excuse for not paying the minimum wage. We have named a total of 3,200 businesses since 2013, including more than 500 just last month.

The hon. Gentleman raised the point about the vacancy in the Low Pay Commission. We are actively seeking candidates for that; if anybody is out there listening, I am very happy for them to come forward. I am very confident that new chair Baroness Stroud will do a fantastic job.

The SNP spokesman said that he wants a higher living wage, which I completely understand. He is very willing to nail his colours to the mast, unlike the Opposition, about where he thinks that should be, but I gently push back to him as well on the balance we need to strike here. The hospitality sector in Scotland is struggling as well as ours, and others are too. We must make sure we get that balance right. I have to say that in Scotland the failure rate in hospitality is even worse, being 30% higher than it is in England. That is partly down to the fact that Scotland has not passed on the rates money for those hospitality businesses, as has been done in England. The average pub in Scotland is £15,000 a year worse off because of that policy.

Oral Answers to Questions

Justin Madders Excerpts

Thursday 7th March 2024 Commons Chamber

[Mr Speaker]

I call the shadow Minister.

[Justin Madders (Ellesmere Port and Neston) (Lab)]

My hon. Friend the Member for Bury South (Christian Wakeford) is right that too many employers still think they can opt out of paying the minimum wage. Earlier this week, the Low Pay Commission published its 2023 report, which said that non-compliance “appears persistent” in the social care sector. I have heard a range of evidence citing problems with record keeping, exploitation of migrant workers, and workers routinely not being paid for travel time.

It is clear that the social care sector has a real issue with the minimum wage but, when browsing through the latest naming and shaming list published by the Department a couple of week ago, I found only 17 employers classed as being within the social care sector, which is less than 0.1% of the total number of employers in the sector. What will the Minister do to ensure that everyone working in the social care sector gets at least the minimum wage?

[Kevin Hollinrake]

The hon. Gentleman is right to raise this issue, on which we do much. For example, we make sure that people can anonymously report the underpayment of the national living wage through either His Majesty’s Revenue and Customs or ACAS. It is really important that we do that. We have labour market enforcement undertakings and orders, and we provide the tools for serious cases. As of April 2022, 40 employers were on labour market enforcement undertakings and 18 employers have been prosecuted. The message should be loud and clear to employers that if they do not comply with the law, we will take action.

Shared Parental Leave and Pay (Bereavement) Bill: Instruction

Justin Madders Excerpts

Instruction
Tuesday 5th March 2024 Commons Chamber

[Justin Madders (Ellesmere Port and Neston) (Lab)]

I will just say a few words about the motion; I am sure the Minister would be disappointed if I did not.

I pay tribute to my hon. Friend the Member for Ogmore (Chris Elmore) for his work on this issue. I am pleased to see the hon. Member for Broxtowe (Darren Henry) here too, because they have both been working on this issue with the Minister, and it is very pleasing that we have got to this stage. I commend my hon. Friend on his success in achieving Government support. This important Bill will help those in the awful and unimaginable situation of losing a partner when a child is expected. The Minister is right to try to equalise the provisions across all circumstances. We look forward to the Bill hopefully being amended in Committee to take on board the intentions set out today. We welcome the motion, and we wish it all the best.

[Darren Henry (Broxtowe) (Con)]

When Aaron came to my constituency surgery with his three-week-old son, Tim, in his arms—his wife sadly died in childbirth—he had been working for a company for less than six months so he was not entitled to shared parental leave. Does the shadow Minister agree that this will affect the very small number of people a year in that situation? It will not be a significant burden on businesses and the Government, but for the people it affects it will be hugely impactful.

[Justin Madders]

The hon. Gentleman is absolutely right. We have discussed that with the Minister in other debates. The Bill will thankfully affect a very small number of people, but the hon. Gentleman is absolutely right that for them it will be an incredibly important advance. On that note, I wish the Bill the best of success in its passage through Parliament.