Non-disclosure Agreements in the Workplace

Justin Madders Excerpts

Tuesday 5th September 2023 Westminster Hall

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

It is a pleasure to see you in the Chair, Ms Ali. I congratulate the right hon. Member for Basingstoke (Dame Maria Miller) on calling this debate; it is an area that she has worked in for a considerable period of time and she articulated very clearly what the problems are and why they need tackling.

There have been a lot of excellent contributions today. My hon. Friend the Member for York Central (Rachael Maskell) brought her vast experience of employee representation to the fore. She talked about having open cultures in the workplace, which is a good way of looking at how this all needs to change. The hon. Member for Oxford West and Abingdon (Layla Moran) made an excellent speech; she made the important point that when someone signs these NDAs, they are not for a month or a year, but for life. As I will go on to explain, that does cause people difficulties later.

The hon. Member for Stoke-on-Trent Central (Jo Gideon) described NDAs as being weaponised, which I thought was a good description. She also said that employment tribunals never tackle the underlying cause of discrimination in the workplace. Of course, tribunals can make recommendations to employers, but we are getting a body of evidence that this is not an effective tool, and that perhaps an enforcement body is needed to look at those issues. My hon. Friend the Member for Birmingham, Yardley (Jess Phillips) brought all of her experience to the fore and gave a truly fantastic speech. She was right to say that this issue is fundamentally about power and its imbalance, which I will come to in my speech.

I do not dispute that there is a need for some non-disclosure agreements. There are sometimes appropriate situations, where they are needed, but I think we all agree that they are far more prevalent than they need to be and are being abused to cover up other issues. In the absence of any data on the numbers of agreements in operation, we are reliant on the legal profession and campaigning groups to give us an idea of what is happening.

Evidence collected by the Women and Equalities Committee and a recent study conducted by the Solicitors Regulation Authority found that there is widespread use of NDAs in the workplace, with little regard given to their appropriateness. In 2019, the Committee said:

“Confidentiality and non-derogatory clauses have become commonly used in agreements reached between employers and employees when settling or closing employment complaints or employment tribunal cases about discrimination or harassment. Indeed, they are commonplace when settling any type of employment dispute.”

The Solicitors Regulation Authority said that

“firms often told us that NDAs are included as standard without consideration of the purpose for including such a clause. For example, a firm commented they were used even ‘when not strictly necessary, where everyone knew the ongoing issue.’”

As a former practising lawyer who has handled thousands of those settlement agreements, I can confirm that NDAs are standard and the attitude of most employers, when challenged on the inclusion of them, is that they are a standard clause and the agreement is presented on a take-it-or-leave-it basis—whether the NDA is necessary or not. The reason they continue is the imbalance in power in the employment relationship. The SRA found that only six of 25 solicitors it interviewed reported even questioning the need for a confidentiality clause. The fact that those drafting them give no particular weight to them is a trend. It is in direct contradiction to the advice given by ACAS, which says that they should only be used where necessary and not as a matter of course.

There are many workers bound by completely unnecessary NDAs at the moment, and when an important industry regulator, such as the Solicitors Regulation Authority, suggests there is a wholesale misuse of a contractual term—one that, as we have heard, can have a profoundly negative impact on workers—there is a good argument to say that the Government need to intervene. It is a good example of where there needs to be more intervention. I echo the question raised by my hon. Friend the Member for York Central, and ask the Minister what work will be done to understand the extent and misuse of these agreements.

It is easy to see why the agreements are so prevalent. The Employment Lawyers Association said clearly that employers are the driving force behind NDAs, as they enable settlement without admission of liability. The employers’ reasoning is simple: why settle publicly when they can wait for a tribunal that might get them off the hook or award a lower amount? That speaks to a wider, more problematic imbalance of power between employers and employees that is endemic in the labour market. In many ways, the proliferation in use of NDAs is both a symptom of, and a tool used to perpetuate, the imbalance of power in the workplace. The Solicitors Regulation Authority—which, let’s be honest, is not at the vanguard of left-wing workers’ rights—described the imbalance of power in the workplace as “fundamental”.

A witness before the Women and Equalities Committee —I think this evidence is very powerful—said:

“There is this very well-founded fear amongst women that, if they talk about having had problems at work, even if their problem is not of their own making, they will be labelled as a troublemaker and they will find difficulties getting new employment.”

Those comments, although made in the context of harassment, could equally apply to a trade union representative or, as the hon. Member for Cheadle (Mary Robinson) said, to a whistleblower or, indeed, to anyone who challenges poor practice in the workplace. That power imbalance affects everyone, across the board.

One of the most troubling findings in the Select Committee report was the culture that NDAs perpetuate in some workplaces. This means that dangerous cultures and management failures continue. In relation to the individual, NDAs starve alleged victims of any form of justice, either through internal processes or through tribunals. For the employees who remain, the alleged perpetrator can be left untouched, presenting a danger to the rest of the workforce.

The Committee concluded:

“We are particularly concerned that some employers are using NDAs to avoid investigating unlawful discrimination…and holding perpetrators to account.”

Let us not forget that employers have a duty of care to all their employees and should be looking to tackle these instances, whether or not the person involved is a “rainmaker”—that was another concerning part of the evidence. The Committee report referred to rainmakers being given a degree of latitude when it came to behavioural standards. Those individuals are worth more to the business, which continues to use NDAs to avoid holding them to account. That sends out a clear message that the safety of employees can be ignored if the accused is valuable enough to the company. One worker told the Committee:

“I was told the abuser was indispensable and I was not.”

I think we can all agree that that is completely unacceptable and should not be happening in any workplace in this country.

According to the Solicitors Regulation Authority, NDAs should not impede or deter someone from co-operating with a criminal investigation, reporting an offence to the police or reporting a breach to a regulator, or prevent proper disclosure about the agreement or circumstances surrounding it to professional advisers, including medical professionals and counsellors, or the making of a disclosure under the Public Interest Disclosure Act. However, although there were no cases of solicitors drafting these agreements to deliberately prevent that, the SRA’s recent investigation found

“a number of common trends or practices which inadvertently might contribute to this happening.”

This leaves signatories feeling uncertain as to whom they can speak to or what they are allowed to say. When combined with the threat of clawback or penalty clauses, many will, unsurprisingly, self-censor to prevent them from losing their settlement. It also brings with it a weight to be carried—a significant burden over the long term.

Clearly, questions must be asked of the response to this situation. What I and other hon. Members have described today is not a recent problem that has emerged from nowhere. The implications of the use of NDAs in the workplace have been known for some time, yet we have seen very little action taken. There was a flurry of interest and promises were made back in 2019, but more than four years later the only changes have been updated ACAS guidance and a warning notice sent out by the Solicitors Regulation Authority, both of which are non-binding and appear to have done little to mitigate the problems.

The Legal Services Board offered a damning indictment in a call for evidence earlier this year. It said that

“notwithstanding the usefulness of the standards and guidance summarised above, the evidence of continuing misuse of NDAs suggests that clearer and more effective expectations for the professional conduct of legal professionals may be required.”

This is rather galling given that the Government promised to

“crack down on misuse of non-disclosure agreements”

all those years ago. Legislation was supposed to be in place to compel employers to write the limitations of the confidentiality clause in plain English, extend legislation to ensure that individuals signing NDAs get independent legal advice, and introduce enforcement measures to deal with NDAs that are not compliant and make them void. The updated ACAS guidance has included these elements, but that is not the same as enforceable legislation. As the right hon. Member for Basingstoke said, if it is right for the higher education sector, it is right for everywhere else as well. I feel that this area has fallen victim to the Government’s inertia on employment rights. As the Minister will have heard today, there is a great deal of willingness to see that changed.

[Rushanara Ali (in the Chair)]

I would be grateful, Minister, if you could leave a little bit of time at the end for Dame Maria Miller to respond to the debate.

Strikes (Minimum Service Levels) Bill

Justin Madders Excerpts

Consideration of Lords message
Monday 17th July 2023 Commons Chamber

[Madam Deputy Speaker (Dame Rosie Winterton)]

I call the shadow Minister.

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

I draw the House’s attention to my entry in the Register of Members’ Financial Interests.

Let me repeat, at the outset, our opposition to the Bill and our intention to repeal the Act that it will become should we be in a position to do so in the future. It is one of the most illiberal, unconscionable and ultimately destructive pieces of legislation produced by any Government. We believe that the right to withdraw labour is a fundamental right, a human right, and one that should not be extinguished. Even if some Conservative Members cannot see past their hostility to trade unions and past the easy headlines, they should see that what they are asking their constituents to do is distinctly un-British, because it infringes on individual freedoms that ought to be—even for Conservative Members—a basic part of any open and democratic society.

Freedom matters, and valuing freedom sometimes means that we protect another person’s freedom to do something even if we do not personally agree with the particular course of action. But our objections are based not just on principles, but on practicalities. Ultimately, we do not think that the Bill will work. The Bill is counterproductive because it will not quell the concerns of many people in the sectors that have taken industrial action. Taking away the right to strike will not take away people’s concerns. We cannot legislate away people’s legitimate grievances about their working conditions. Because the Bill is so ill defined and poorly thought through, Parliament must have a proper opportunity to consider its ramifications.

The measures set out in Lords amendment 2D attempt to address some of those issues. The amendment also provides yet another opportunity for us to raise our concerns about the Government’s lax approach to proper scrutiny during the Bill’s progress so far. Let us go back to when the Bill was first published. It is surely a basic expectation of Government that they should provide an impact assessment before asking hon. Members to vote on a Bill. But no—we were asked to trust the Government that the matter was in hand and that all would be fine. We said it at the time and we say it again: that approach is completely unacceptable.

The Bill had been trailed in the press for months before it was published, so not to have the impact assessment ready at the same time was a failure of basic competence. When it finally appeared, we could see why the Government were so keen to keep it under wraps. The Regulatory Policy Committee said that it was not fit for purpose—it could just as easily have been talking about the Government—and no wonder, given that the assessment contains statements that undermine both the purpose and execution of the Bill.

The impact assessment states that the Bill

“could mean a general increase in tension between unions and employers. This may result in more adverse impacts in the long term, such as an increased frequency of strikes for each dispute.”

When Ministers told us on Second Reading that the Bill would reduce the disruption caused by strikes, what they apparently did not know was that the Government’s own impact assessment would say that it could, in fact, have the opposite effect. The impact assessment also says, on at least half a dozen occasions, that assumptions are being made about the level of service that would be required. That is the point of the Lords amendment: unless we have some idea about what these minimum service levels will be—in the six months since the Bill was published, Ministers have not come to the Dispatch Box and told us—we are legislating in a vacuum.

The point has not been lost on the Delegated Powers and Regulatory Reform Committee, which wrote in its assessment that

“there is nothing in the Bill saying what those minimum service levels are. We shall only know when Ministers make regulations after the Bill is enacted. This is small comfort to Parliament, which is considering the matter right now.”

The Committee’s recommendation was that the Government should publish indicative draft regulations alongside the Bill. As it rightly points out,

“the Government must have some idea how they propose to exercise these powers.”

It is no surprise that the impact assessment got a red rating. Of the 861 Bills assessed by the Regulatory Policy Committee since its creation, just 2.9% have been given a red rating. When legislation represents such a fundamental departure from past practice, the importance of impact assessments increases rather than decreases.

If this all sounds familiar to you, Madam Deputy Speaker, that is because it is. Only last week the High Court said, in relation to the consultation process for the regulations that allow agency workers to break strikes, that

“this is not a case in which the evidence is that the proposal had obvious and undisputed merit based on cogent evidence, and enjoyed strong support from representative bodies in the sector”.

It could have been talking about this Bill—no doubt, in time, it will be.

The pattern is familiar. The Government decide the policy, although “policy” is probably too strong a word. The Government decide the headline that they want to create, rush through ill-thought-out legislation and then ignore all the voices that point out principled and practical objections. That is to treat democracy with contempt. Parliament is not a rubber-stamping process to agree whatever the Government of the day decide. When Parliament is starved of its ability to properly scrutinise legislation, that impacts on fundamental human rights, as it does in this case. It should come as no surprise that there is pushback from the other place requiring that a robust process be followed.

The amendment is important because the International Labour Organisation’s conference committee on the application of standards called on the Government to ensure that existing and prospective legislation is in conformity with the convention that governs freedom of association and the protection of the right to organise. I would not have thought that is too much to ask of a modern liberal democracy. In fact, I am rather ashamed that the ILO has had to point it out at all.

All this amendment does is what the ILO is asking the Government to do anyway, which is to undertake genuine consultation before implementing minimum service regulations. This means that, when regulations are published, they would include an impact assessment and there should be genuine consultation on the regulations, including on the protection for workers named in work notices and the reasonable steps a trade union needs to take to ensure compliance.

--- Later in debate ---

[John McDonnell (Hayes and Harlington) (Lab)]

I am sorry to interrupt my hon. Friend when he is in full flow but, as he is developing his argument on the need for consultation and impact assessments, has he been able to clarify with the Government what happens if an employer refuses to comply? In London, for example, the buses are contracted out, and individual bus companies have had individual disputes. If the Government instruct there to be a minimum service level but the employer does not want to sour industrial relations in the long term and therefore refuses to comply, what then happens?

[Justin Madders]

That is a very good question. My understanding—no doubt the Minister can correct me if I am wrong—is that it is still up to the employer to determine what work notices it issues, which makes the Bill a little ludicrous.

All these consultation papers, all these impact assessments, and we are still legislating in the dark.

[Rachael Maskell]

My hon. Friend has just made a valid point, because when NHS Employers and the NHS Confederation came before the Select Committee on Health and Social Care, they said that they did not want any of this legislation. Presumably, following that logic, they will not have to issue minimum service level terms for a strike.

[Justin Madders]

I thank my hon. Friend for her intervention. That is why it would have been so interesting to see what the consultation responses were to the draft regulations, because those might have told us whether employers were saying, “Don’t do this; we don’t think it is going to work.” We know that a long list of employers’ organisations are opposed to this Bill, and I will come on to that in a moment. They understand that, ultimately, it is not going to help industrial relations but will sour them.

In summary, the Bill’s impact assessment turns up late and is inadequate; no pre-legislative scrutiny or evidence sessions for the Bill took place; the Committee stage is rushed through in one day; and subsequent consultations are incomplete and leave many questions unanswered. Yet the Government still say that this Lords amendment is not necessary. The evidence to date and the opinion of the ILO say otherwise. I referred to the fact that the ILO is not alone in expressing concerns about the Bill. Many organisations have expressed alarm, including the Equality and Human Rights Commission, the Joint Committee on Human Rights, NHS Providers, the rail industry, the Chartered Institute of Personnel and Development, the TUC, and the Welsh and Scottish Governments. The Transport Secretary and the Education Secretary have also done so, and I could give more names, but I have only an hour for this debate and so I will leave it there.

When we have the shameful spectacle of the ILO calling this Bill out, Members need to think again. By rejecting this Lords amendment, the Government are, in effect, saying one of two things: either they do not know whether they break international law; or they do know but they just do not care. We ought to care, we ought not to be trailing behind in workplace protections, and we ought not to be mentioned in the same breath as Turkmenistan. We ought to be leading from the front, as an exemplar for other countries to follow and a leader on the international stage that says, “Yes, good workplace rights and strong trade unions are a key component in any prospering modem economy, and the right to withdraw your labour is a fundamental one.” However, this Bill is the hallmark of a weak Government who have run out of steam, have nothing left to offer but division and want to silence the very people who keep this country going—shame on them.

[Madam Deputy Speaker (Dame Rosie Winterton)]

I call the Scottish National party spokesperson

Post Office Ltd: Management Culture

Justin Madders Excerpts

Thursday 13th July 2023 Westminster Hall

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

It is a pleasure to see you in the Chair, Sir George. I start by thanking the hon. Member for Motherwell and Wishaw (Marion Fellows) for securing the debate. Her tireless work on this scandal is well recognised across the House and is greatly appreciated. Indeed, all Members who have spoken have been powerful advocates during their time in the House. They gave many powerful examples of how the management culture in the Post Office has had an impact on individual people’s lives.

The hon. Member for Motherwell and Wishaw talked about obfuscation, secrecy and cover-ups, saying that nobody has truly been held to account for this. She made it clear that the victims she has spoken to have little faith that justice will be done. That really has to change. She raised several important questions that the Minister will hopefully be able to address, and I will refer to a number of the issues she mentioned.

The hon. Member for Telford (Lucy Allan) spoke very powerfully. Her point about her constituent meeting the chief executive earlier this week really got to the nub of the problem: words need to be matched by action. That is the challenge that Post Office’s management need to step up to. She raised questions, as all Members did, about culture and governance. My right hon. Friend the Member for North Durham (Mr Jones) raised similar issues in a passionate speech. It is clear that there are serious questions about what the board is doing.

Litigation has been ongoing for several years. The fact that the inquiry does not have the documents because they cannot be found raises questions about what on earth has been going on. Documents would normally be prepared for litigation, so my right hon. Friend the Member for North Durham was right when he said that questions must be asked about what the board is doing. He talked about lies, cover-ups and deceit being the culture—a culture that is rotten to the core. He also talked about a tsunami of public cash being used to defend the indefensible. Those comments really sum up why this is something that has to change.

As the hon. Member for Motherwell and Wishaw said, it is very clear that this is one of the greatest—if not the greatest—miscarriages of justice in this country. We have heard many poignant examples about how the lives of hundreds of innocent post office workers have been ruined by the Post Office aggressively pursuing them on the basis of a fundamentally dodgy IT system about which worries had been flagged up.

Concerns about culture have been repeatedly raised in the debate. As Members have mentioned, the High Court in the case of Bates v. Post Office Ltd stated:

“There seems to be a culture of secrecy and excessive confidentiality generally within the Post Office, but particularly focused on Horizon.”

This is not someone down the Dog and Duck talking about the Post Office. It is a member of the judiciary, so we have to take those words very seriously.

Those sentiments are reflected by the Communication Workers Union, which identified a

“serious and longstanding cultural and governance problem”

rooted—a word we keep coming back to—in a fundamental lack of accountability. In its view, this led to the abuse of power, corporate complacency, denials, cover-ups and false evidence that have been the hallmark of the Horizon scandal. These comments are rightfully damming. The complete overhaul of Post Office management and culture that one would have expected on the back of such claims has been lacking. From the stories we have heard, the Post Office seems largely unreformed.

Despite assertions to the contrary, we know that, as the hon. Member for Motherwell and Wishaw detailed, years have been spent fighting compensation claims against honest sub-postmasters. Every trick in the book has been used to draw things out for as long as possible. That includes making low compensation offers, only for them to be raised once legal action is taken, and using technical and misleading language in letters to dissuade victims from seeking expert advice. Those are not the behaviours of an organisation that has a true insight into its failings. Those are not the behaviours of an organisation that is contrite. Those are not the behaviours of an organisation that recognises that it needs to change. Sixty former sub-postmasters have died without payouts and most victims are still waiting to receive their full and fair compensation. That is outrageous. Victims have been failed time and again by the Post Office’s toxic management culture. What are the Government going to do to protect those victims and to ensure that justice will be fairly and swiftly delivered?

As we heard from the hon. Member for Motherwell and Wishaw, executives have been receiving substantial bonuses while this has all been going on. We heard about chief executive Nick Read receiving £455,000 in bonuses on top of his £415,000 salary in ’21-22. As we know, part of those substantial bonuses was falsely reported to have been agreed by Sir Wyn Williams, who led the Horizon inquiry. That bonus was paid due to Read’s co-operation in the handing over of documents. We now know that to be false on two counts. First, it was reported in May that Sir Wyn did not sign it off; that was a complete fabrication. Last week, it was found that the documents for that day of evidence in the inquiry had not actually been disclosed at all. As the hon. Member for Telford said, there must be questions when the chief executive does not know the facts on something so important to the Post Office and to the victims.

This is not just a casual misunderstanding; the Post Office annual report and accounts for 2021-22 published the metrics on which bonuses for senior leaders were based. One metric, which was marked as achieved, read:

“All required evidence and information supplied on time, with confirmation from Sir Wyn Williams and team that Post Office’s performance supported and enabled the Inquiry to finish in line with expectations.”

We now know that to be completely false; Sir Wyn Williams actually said:

“I am dissatisfied by the approach that has been taken by the Post Office; in my view, their approach demonstrates a lack of clear thinking about the disclosure obligations owed to the Inquiry with which the Post Office must comply and the means by which their obligations can be fulfilled.”

The Post Office has issued a clarification to the report and an apology, stating:

“We recognise that by setting this particular sub-metric, and marking it as achieved, we implied that Sir Wyn and his team had agreed to this sub-metric and had commented on the outcome. We wish to clarify that we did not ask for Sir Wyn’s agreement to the wording of this sub-metric and Sir Wyn and his team did not give any input into assessing whether it had been met.”

This is an annual report; basic things like that ought to be checked before they appear in black and white.

If we put aside the argument of whether executives should be paying themselves handsome sums for complying with things that they ought to be doing by law anyway, and if we also try to overlook the vast irony of the Post Office being caught doing what it pursued sub-postmasters for supposedly doing, as my right hon. Friend the Member for North Durham said, that is a moral issue. There are questions about that.

There is also the question of whether people making such statements are fit to be running any business. I know the Minister is looking into the governance arrangements, but has he commissioned any investigation into whether section 1112 of the Companies Act 2006 was breached in this episode? I would be grateful if he would address that specific point in his response. If he is unable to do so today, can he respond in writing?

Understandably, the focus has been on the Horizon scandal—there are so many things that need to be addressed—but, as other Members have referred to, the creeping withdrawal of post office services affects all our communities. We have been reminded today of the important functions they perform, particularly for older and disabled people, carers and those who simply cannot access the internet. The post office is a vital lifeline, especially when other vital in-person services such as banks are closing at an alarming rate. There is a serious question about whether the management have the ability to meet those challenges.

I was struck by the comments from a constituent of the hon. Member for Motherwell and Wishaw who said that they make more money from the coffee machine than from post office services. That might explain why there is a silent withdrawal of the post office from our communities. Of the 11,500 post offices in operation, only 4,000 are open seven days a week. There has been a proliferation in the number of outreach branches. In 2000 there were just 52, representing 1% of the total network. As of March last year, that had gone up to 1,901, comprising 16% of the network.

I would be interested in whether the Post Office meets any of its six accessibility criteria if part-time or partial service branches are included. Have the Government conducted any analysis into that? How many people are reliant solely on outreach services? Constituents have told me that they have to go on a magical mystery tour of the constituency to find a post office that is actually open, and that is not because they go out at unsociable hours; it is often in the middle of the day. Many people now struggle to find somewhere open because the advertised hours are not adhered to. I do not know why that is happening, but it points to something badly wrong in the whole system. What can be done about it? Has the Minister made an assessment of the anticipated profits of an average post office operating on a full-time basis? Is the system sustainable or is there a problem with the way it is being run?

Another difficulty is when one of the many sub-postmasters decides to close up shop, and we see time and again a failure to address that issue. It has happened many times in my constituency; I am sure it has happened in other Members’ constituencies. Every time the Post Office tells us that it will look for another partner to open up. We wait and we wait and sometimes—months or even years later—we get a new post office, but sometimes it does not appear at all. I have said repeatedly, every time there is a closure, that the Post Office’s laissez-faire attitude to another one reopening is not good enough. It does not work, and it is allowing services to wither on the vine. I can give examples of each outcome in my constituency.

In Elton in 2016, we waited a year for the post office to reopen after it had closed. Neston lost its branch almost two years ago, and it is now open in a car park for two hours on two days a week. Great Sutton post office closed last year, and there is no sign of it reopening. It all feels like management either do not care or do not have the capability to address this structural challenge. We know they have not been able to do the job in the past. Can they do it in the future?

I raised that issue primarily because there is a pattern here. The failure to handle post office closures has parallels with the failure to deal with the Horizon scandal, which have both shown an unwillingness to change or to accept that things need to be improved.

Does the Minister have confidence in the management of the Post Office? Does he think the management culture has changed sufficiently since Horizon first emerged? What are the Government doing to ensure that victims receive the compensation that they rightly deserve? Does he consider that they have a sufficient grip of public access to post offices and a proper strategy to maintain services?

Strikes (Minimum Service Levels) Bill

Justin Madders Excerpts

Consideration of Lords message
Wednesday 21st June 2023 Commons Chamber

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

Thank you, Mr Speaker. I draw the attention of the House to my entry in the Register of Members’ Financial Interests.

Today, we consider a number of Lords amendments that will go some way towards making the Bill slightly less draconian than it currently is, but will not make it a Bill that we can ultimately support. I start by paying tribute to Members in the other place who have done their best to ameliorate the Bill with the sensible amendments that we are considering, and which we will be supporting. What those Members understand is that the Bill is the act of a weak Government who have lost the authority and the will to govern for everyone; a Government who prefer legislation to negotiation, diversion to resolution, and confrontation to consultation. How Ministers have the gall to come to the Dispatch Box and talk about the importance of minimum service levels when we have seen the decimation of our public services under this Government—with a record 7.4 million patients left on waiting lists, record teacher vacancies, and ever-increasing response times to calls to the police—is beyond me.

[Margaret Greenwood (Wirral West) (Lab)]

My hon. Friend is making excellent points. I have heard from doctors in Wirral West who firmly believe that the Bill represents an intrusion on legitimate trade union activities, undermines workers’ rights to representation, and would leave unions unable to effectively represent their members. Does my hon. Friend agree?

[Justin Madders]

I thank my hon. Friend for her intervention, and I do agree with those doctors. I will go on to explain why the Bill is an attack on basic freedoms and liberties that I thought this country held dear.

Turning first to Lords amendment 2B, as we know, the Bill presents the Secretary of State with huge, unchecked powers, throwing scrutiny and democracy out of the window. We think it is entirely reasonable that if a Secretary of State wants the power to set, impose and police minimum service levels, they should be accountable for the impact of those powers and able to demonstrate what their impact will be. Requiring them to conduct a proper impact assessment on the use of those powers and hold a consultation on any specific proposals they have could be helpful to a Secretary of State, because they cannot possibly know how every nook and cranny of any particular sector operates and what is needed to deliver a minimum service level—assuming they can define what one is.

If the Government think that it is such a wonderful idea to introduce minimum service levels in the sectors covered by the Bill, they should not fear scrutiny of their proposals, consultation with those directly affected, or challenges to their assumptions. My fear is that the Government fear all of those things. When the Regulatory Policy Committee described the Bill as “not fit for purpose”, one would have hoped that any sensible and rational Government would put a little bit of effort into talking to people to make sure that their own Bill had even a remote chance of working, but I suspect that—like so many things that we hear from this Government—they do not look beyond the easy headline and do not think through the consequences of their actions.

I will turn briefly to Lords amendment 5B, which attempts to deal with what is essentially a full-blown attack on the independence of trade unions and their members. I know that the Government have been raising the bar ever higher on the number of members required to vote in favour of industrial action. However, even they must see that putting a requirement on a trade union to take action to stop some of its members from participating in industrial action once they have voted in favour of it—as proposed new section 234E of the Trade Union and Labour Relations (Consolidation) Act 1992 would do—undermines the very essence of what a trade union stands for.

We have never had an adequate explanation of what reasonable steps a union is expected to take in those circumstances. The Minister previously told us that it would be a matter for the courts to determine, but that represents an abject failure by the Government to do their job. Are they really saying to trade unions that they can face damages of up to £1 million if they fail to comply with the Bill, but that they will have to wait for a court to decide what they need to do to avoid that liability? That is ludicrous, dangerous, and a potentially disastrous situation for any trade union to be in. This amendment removes Government interference in lawfully and democratically made decisions by an independent non-governmental organisation, and removes the completely disproportionate risk that trade unions face if they fail to adhere to the undemocratic, unspecified and unconscionable requirements of this provision.

[Rachael Maskell]

I should refer to my entry in the Register of Members’ Financial Interests.

My hon. Friend makes a very good point about the jurisdiction of trade unions. I have said this in the House before, but Government Members just do not seem to understand it. It is the members of the trade union who determine what happens within a trade union—it is not a general secretary or even an executive, but the members—so how are they, as individual members, going to instruct workers to attend work?

[Justin Madders]

That is really a question for the Minister, and one that I think the Government have failed to answer adequately. I think the point my hon. Friend makes is a good one. When Conservative Members traduce the union barons, they actually traduce every single member of the trade union who has voted in support of industrial action, and I am afraid that that is no way for any Government to operate.

I would ask Conservative Members, not that there are many here, to consider what the Bill actually means. Representatives of trade unions will be required to encourage, cajole, advise, pressurise or even demand that their members cross a picket line. They will be asking trade unions to actively go against the very thing they were set up to do. I would say that it is a bit like asking a Conservative MP to vote in support of higher taxes, but I guess that, with the highest tax burden in over half a century, we may have to drop that particular analogy.

[Margaret Greenwood]

My hon. Friend is being very generous in giving way. I am a proud trade unionist, but I am also a former schoolteacher. I am concerned not only about the administrative burden that this requirement for employers to serve work notices on staff will create, but about the risk of damaging relationships within the workplace. He is talking about people being required to cross picket lines, and that would most definitely be a case in point. I am very concerned, because schools and hospitals in particular operate through staff collaborating with each other, and risking those relationships is a very dangerous thing to do.

[Justin Madders]

My hon. Friend is absolutely right. That is why so many employer organisations are also against this Bill, because they understand what it will do for industrial relations: it will make them worse, not better. I would ask Conservative Members to think carefully about what they are asking trade unionists to do, which is to go against deeply held, genuine and sincere beliefs—

[Clive Efford (Eltham) (Lab)]

I intervene to give my hon. Friend a chance to get his throat in order. Does he agree with me that, first and foremost, the Prime Minister withdrew his Labour on Monday with the intention of not showing leadership, which is a remarkable feat on the part of a Prime Minister? Does my hon. Friend agree that these are the death throes of a Government who have really run out of steam? They are trying to blame everybody else for what is going wrong. They are going for a cheap headline and have created this piece of legislation, which is anti-trade union and anti-democratic, to try to throw the blame on to the trade unions and workers, and away from where it really lies—with this Government.

[Justin Madders]

I thank my hon. Friend for his intervention—I think my voice has returned, thankfully—and he is absolutely right. This Bill is counterproductive because ultimately it will not quell the concerns of many people in those sectors that have taken industrial action. Taking away the right to strike will not take away people’s concerns; it will just make them worse, and it will prolong anxiety, concern and discord.

Again, I ask Conservative Members to think about what they are asking trade unions to do—to go against deeply held, genuine and sincere beliefs. Whether or not they agree with the right to strike, do they really think in all conscience that this is something that sits comfortably with notions of dignity, respect and freedom? How would they feel if they were compelled to take actions in direct contravention of their own values?

Finally, I turn to Lords amendment 4B. It attempts to tackle the pernicious heart of this Bill, which seeks to destroy the basic freedoms that the trade union and Labour movement have fought to secure over the course of history. From the Chartists to the founding of the TUC, the trade unionists at Taff Vale and the formation of the Labour Representation Committee, the working people of this country have faced a long and arduous struggle to improve their working conditions, and fundamental to that struggle has been the right to withdraw labour. When Conservative Members inevitably vote down this amendment, they are saying to their constituents—the teachers, doctors, nurses, bus drivers and train drivers—that their voice does not matter and that, should they dare to withdraw their labour in search of better terms and conditions, they do so at their own risk.

[Chris Stephens]

The shadow Minister is being very generous in taking interventions. The heart of the Lords amendment is to protect workers who have been dismissed so that they have recourse to a tribunal. That is a fundamental human right, is it not?

[Justin Madders]

One would have thought so, and that is probably why the Equality and Human Rights Commission has expressed great alarm at this Bill. If the Government want to give themselves the power to threaten every firefighter, every teaching assistant and every paramedic with the sack when they exercise their democratic right to withhold their labour, they should think very carefully about what they do with that power, because in a free society no Minister should hold that power—not that Ministers seem to understand what this Bill actually does, because the Minister said last time:

“The reality is that nobody will be sacked as a result of this legislation.”—[Official Report, 22 May 2023; Vol. 733, c. 103.]

I know that the Government chose to bypass the normal line-by-line consideration of this Bill, but one would have hoped that the Minister had read as far as the schedule, because it does actually contain the power to sack people for going on strike.

Even if the Government do not understand the powers they are giving themselves under the Bill, they ought to understand the principle of the withdrawal of labour in the event of a dispute. As my hon. Friend the Member for Eltham (Clive Efford) has mentioned, many Conservative Members withdrew their labour the other night. In fact, 200 of them had no difficulty in doing so. Indeed, former Prime Minister Johnson withdrew his labour after he disagreed with the report from the Privileges Committee. So they should understand that the principle of people withdrawing their labour is an important one. It is a basic and fundamental right that every one of our citizens should enjoy in a free and democratic society. We are not serfs required to provide toil to the lord of the manor or conscripts engaged in a war against an invading force; we are citizens of this country, and in a free country the right to withdraw labour should be protected and respected.

Even if Conservative Members believe that the requirement to send someone into work against their will is somehow consistent with a free and democratic society, they should at least consider the fact that the Bill as it stands means an employee can be sacked for failing to comply with a work notice, even if they say they have not received it. Yes, someone can be sacked for not complying with a work notice without any challenge to it legally, and they can also be sacked for not complying with it even if they have never seen it. How is that justice, how is that reasonable and how is that good industrial relations? It is a recipe for injustice, for toxicity and for abuse by employers who want to get rid of the most troublesome employees.

I will not list all the organisations that have condemned this Bill, but two of the main employers in the key rail and health sectors have called this out for what it is, because they know that rather than resolve industrial disputes, this Bill will prolong them. They know that the kind of restrictions this Bill places on people are anti-democratic and not in the best traditions of this country. It is no wonder that even members of the Cabinet have criticised this Bill. Indeed, this week we had the shameful news that the United Nations, through the International Labour Organisation, has called on the Government to respect international law, such is the threat that this Bill poses to it. No, we cannot accept this tawdry, vindictive, unworkable disgrace of a Bill. This Bill attacks the people who keep this country going, and the sooner the Government realise that the politics of division will not work, the better.

[Mr Speaker]

I call the SNP spokesperson.

--- Later in debate ---

[Kevin Hollinrake]

I thank Members for their contributions. It is fair to say that we will have to agree to disagree. We believe that this legislation is a proportionate response that gives the Government the power to ensure a safe level of service in areas such as health, transport and border security, so that people’s lives are not put at risk and they can work, access healthcare and safely go about their daily lives.

I will touch on one or two points raised by right hon. and hon. Members. I have a great deal of time for the shadow Minister, the hon. Member for Ellesmere Port and Neston (Justin Madders), though perhaps we do not agree so much in this debate. He asked who we govern on behalf of, and he listed very important people in our society—our nurses, train drivers and border security officers. But is he properly representing the many other stakeholders in this debate, such as pub landlords, restauranteurs, hoteliers and people seeking urgent medical treatment or trying to get to work or to see family? There have been 600,000 cancelled appointments as a result of the strikes of recent months and £3.2 billion of economic detriment—much of that to our restaurateurs, hoteliers and pub owners. It is important that their voices are heard, too.

[Justin Madders]

I hear what the Minister is saying, but that is an argument to ban strikes altogether. Is that not what he is doing?

[Kevin Hollinrake]

We have been clear that there is a balance between people being able to seek industrial action and being able to go about their daily lives. That is the balance that we are trying to strike. He asked if we fear scrutiny; not at all. What we fear is delay. That is what the Opposition parties are trying to bring about: delay in wrecking amendments.

Oral Answers to Questions

Justin Madders Excerpts

Thursday 18th May 2023 Commons Chamber

[Mr Speaker]

I call the shadow Minister.

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

Ministers have promised an employment Bill more than 20 times, but they have consistently failed to deliver. It seems that not a week goes by without a company in the gig economy announcing that it is stripping back workers’ rights and protections, presumably because they are confident that this Government will not legislate to introduce protections in the gig economy. Will the Minister come clean on the Government’s plans? If they are not going to bring in any protections for gig economy workers, will he now apologise to them for another failed promise?

[Kevin Hollinrake]

Paying the national living wage is the law, and failing to pay workers the correct wage can result in significant fines, public naming and, for the most serious offences, criminal prosecution. The national living wage applies to all those who are classified as employees or limb (b) workers. If an individual feels that their employment status has been misclassified, they have the right to go to an employment tribunal.

Retained EU Law (Revocation and Reform) Bill

Justin Madders Excerpts

Thursday 11th May 2023 Commons Chamber

[Mr Speaker]

I call the shadow Minister.

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

What an absolute shambles. I think that the Secretary of State is the sixth different Government representative at the Dispatch Box on this Bill, and unfortunately for her she is the one who will have to hear from us the words that no Government Minister wants to hear: we told you so. We did, repeatedly, as did the Institute of Directors, the TUC, the Bar Council and a host of other organisations.

It has to be asked: why did not the Government listen to those experts in the first place? It was completely unrealistic, reckless and frankly arrogant to think that they could strike 4,000 laws from the statute book in the timescale set out in the Bill. It is no use blaming the blob, the anti-growth coalition or the BBC. This humiliating U-turn is completely down to Government hubris that has found them crashing up against reality, so will the Secretary of State apologise to the entire House, and to all the trade unions and business, legal and environmental groups that were told by the Government that they were wrong?

Will the Secretary of State also apologise for announcing this policy change not to the House but to her friends—or should I say now her former friends—in the European Research Group and to the press? Can she tell us at what point the Government decided on this change of course and on what basis they have chosen the 600 regulations to be removed—or is it 2,000 now, because she mentioned that in her statement as well?

Although we welcome the humiliating climbdown that sees the cliff edge go, the Bill still gives enormous powers to Ministers and at last the cat is out of the bag about what they want to do with them. We are concerned that, although the mode of delivery has changed, the destination has remained the same. That is revealed in the “Smarter regulation to grow the economy” paper released yesterday, which contains a clear plan to water down TUPE and working time rights. We have warned time and again of the threat to workers’ rights in the Bill and in response the Minister said:

“The Government have no intention of abandoning our strong record on workers’ rights, having raised domestic standards over recent years to make them some of the highest in the world.”––[Official Report, Retained EU Law (Revocation and Reform) Public Bill Committee, 22 November 2022; c. 144.]

Well, we can strike that from the record, as we can strike the Secretary of State’s leadership hopes. How can a Government elected on a manifesto promise to

“build on existing employment law”

justify an approach that will water down workers’ protections? It just goes to show that you cannot trust the Tories with workers’ rights.

[Kemi Badenoch]

One of the things that I have found most illuminating about this process is how little those on the Opposition Front Bench understand what we are doing. They simply stand up and repeat their usual talking lines. We have made repeated commitments that we are not watering down workers’ rights in this House. If the hon. Gentleman actually read and understood what we have written, he would understand that we are maintaining workers’ rights but reducing the bureaucracy. That would save £1 billion and is something that both workers and employers want. I know that it is really tough and there are lots of words in it, but the truth is, I say to those on the Opposition Benches, that I can explain it but I cannot understand it for them.

This is a very simple change in approach. We are having the exact same effect that we were always going to have. We are removing more than 2,000 pieces of EU legislation. It is delightful to see those on the Labour Front Bench and the ERG on the same side for once, as they claim to be. If I am upsetting people on both sides, I am probably taking the pragmatic middle ground and I am pleased to be doing so.

There is so much opportunity we can take on EU law reform and that is what this programme is about.

Artificial Intelligence and the Labour Market

Justin Madders Excerpts

Wednesday 26th April 2023 Westminster Hall

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

It is a pleasure to see you in the Chair, Dame Maria. This has been a thoughtful and engaging debate on an important subject, and the contributions have raised very important issues.

I particularly thank my hon. Friend the Member for Birkenhead (Mick Whitley) for introducing this debate. I thought his opening remarks about me were uncharacteristically generous, so I had a suspicion that it did not all come from him—if he wants to blame the computer, that’s fine! As he did, I refer to my entry in the Register of Members’ Financial Interests. My hon. Friend has a long history in the workplace and has seen how automation has changed work—particularly the kind done at Vauxhall Motors in Ellesmere Port—dramatically over many years. What we are talking about today is an extension of that, probably at a greater pace and with greater consequences for jobs than we have seen in the past.

My hon. Friend the Member for Birkenhead said there will be winners and losers in this; that is very important. We must be cognisant of sectors affected by AI where there will probably be more losers than winners, including manufacturing, transport and public administration. My hon. Friend hit the nail on the head when he said that we must have a rights-based and people-focused approach to this incredibly complicated subject. He was right to refer to the TUC paper about the issue. We cannot go far wrong if we hold to the principles and recommendations set out there.

The hon. Member for Folkestone and Hythe (Damian Collins) made an excellent contribution, showing a great deal of knowledge in this area. He is absolutely right to say that there has to be a level of human responsibility in the decision-making process. His references to AI in defence systems were quite worrying and sounded like something from the “Terminator” films. It sounds like dramatic science fiction, but it is a real, live issue that we need to address now. He is right that we should ensure that developers are able to clearly demonstrate the data on which they are basing their decisions, and in saying that the gig economy is a big part of the issue and that the intervention of apps in the traditional employment relationship should not be used as a proxy to water down employment rights.

The hon. Member for Watford (Dean Russell) also gave a very considered speech. He summed it up when he said that this is both amazing and terrifying. We have heard of some wonderful things that can be done, but also some extremely worrying ones. He gave examples of deception, as well as of the wonderful art that can be created through AI, and encapsulated why it is so important that we have this debate today. Although the debate is about the potential impacts of AI, it is clear that change is happening now, and at a dramatic pace that we need to keep up with; the issue has been affecting workers for some time now.

When we survey the Government’s publications on the impact of AI on the market, it is readily apparent that they are a little bit behind the curve when it comes to how technologies are affecting the way work is conducted and supervised. In the 2021 report, “The Potential Impact of Artificial Intelligence on UK Employment and the Demand for Skills”, and the recent White Paper that was published last month, there was a failure to address the issues of AI’s role in the workplace. The focus in both publications was the bigger picture, but I do not think they addressed in detail the concerns we have discussed today.

That is not to downplay the wider structural economic change that AI could bring. It has the potential to have an impact on demand for labour and the skills needed, and on the geographical distribution of work. This will be a central challenge for any Government over the next few decades. As we have heard, the analysis already points in that direction, with the 2021 Government report estimating that 7% of jobs could be affected in just five years and 18% in 10 years, with up to 30% of jobs over 20 years facing the possibility of automation. That is millions of people who may be displaced in the labour market if we do not get this right.

I will focus my comments on the impact on individual workers, because behind the rhetoric of making the UK an AI superpower, there are statements about having a pro-innovation, light-touch and coherent regulatory framework, with a desire not to legislate too early or to place undue burdens on business. That shows that the Government are, unfortunately, content to leave workers’ protections at the back of the queue. It is telling that in last month’s White Paper—a document spanning 91 pages—workplaces are mentioned just three times, and none of those references are about the potential negative consequences that we have touched on today. As we are debating this issue now, and as the Minister is engaged on the topic, we have the opportunity to get ahead of the curve, but I am afraid that the pace of change in the workplace has completely outstripped the pace of Government intervention over the last number of years.

It has been four years since we saw the Government’s good work plan, which contained many proposals that might help mitigate elements of AI’s use in the workplace. The Minister will not be surprised to hear me mention the employment Bill, which has been promised on many occasions and could have been an opportunity to consider some of these issues. We need an overarching, transformative legislative programme to deal with these matters, and the many other issues around low pay and chronic insecurity in the UK labour market—and we need a Labour Government to provide that.

With an absence of direction from Government, there is already a quiet revolution in the workplace being caused by AI. Workers across a broad range of sectors have been impacted by management techniques derived from the use of artificial intelligence. The role of manager is being diluted. Individual discretion, be it by the manager or worker, has in some instances been replaced by unaccountable algorithms. As we have heard, such practices carry risks.

Reports both in the media and by researchers have found that workplaces across a range of sectors are becoming increasingly monitored and automated, and decisions of that nature are becoming normalised. A report on algorithmic systems by the Institute for the Future of Work noted that that is ultimately redefining work in much narrower terms than can be quantified by any algorithm, with less room for the use of human judgment. Crucially, the institute found that workers were rarely involved in or even consulted about these types of data-driven technologies. The changes have completely altered those people’s experience of work, with greater surveillance and greater intensification, and use in disciplinary procedures. Members may be aware that there is now a greater use of different varieties of surveillance, including GPS, cameras, eye-tracking software, heat sensors and body-worn devices, so the activities of workers can be monitored to an extent that was hitherto unimaginable.

Of course, surveillance is not new, but the way it is now conducted reduces trust, and makes workers feel more insecure and as if they cannot dispute the evidence that the technology tells people. Most at risk of that monitoring, as the Institute for Public Policy Research has said, are those in jobs with lower worker autonomy, those with lower skills, and those without trade union representation. The latter is an area where the risk increases substantially, which tells us everything that we need to know about the importance of becoming a member of a trade union. The news today that the GMB is making progress in obtaining recognition at Amazon is to be welcomed in that respect.

Increased surveillance and monitoring is not only problematic in itself; it can lead to an intensification of work. Testimony from workers in one study stated that they are expected to be conducting work that the system can measure for 95% of the working day. Time spent talking to colleagues, using the bathroom or even taking a couple of minutes to make a cup of tea will not be registered as working, and will be logged for a manager to potentially take action against the individual. That pressure cannot be conducive to a healthy workplace in the long run. It feels almost like automated bullying, with someone monitoring their every move.

Many businesses now rely on AI-powered systems for fully automated or semi-automated decision making about task allocation, work scheduling, pay, progression and disciplinary proceedings. That presents many dangers, some of which we have talked about. Due to the complexities in the technology, AI systems can sometimes be a trusted black box by those who use them. The people using them assume that the outcome that emerges from the AI system is free of bias and discrimination, and constitutes evidence for the basis of their decisions, but how does someone contest a decision if they cannot question an algorithm?

As we have heard, there is potential for algorithmic bias. AI technology can operate only on the basis of the information put into it. Sometimes human value judgments form the basis of what is fed into the AI, and how the AI analyses it. As the hon. Member for Folkestone and Hythe mentioned, there are some famous examples, such as at Amazon, where AI was found to be systematically disconsidering women for particular job applications because of the way the algorithm worked. There is little transparency and a lack of checks and balances regarding how the technology can be used, so there is a palpable risk of AI-sanctioned discrimination running riot without transparency at the forefront.

I would like the Minister to commit to looking at how the technology works in the workplace at the moment, and to making an assessment of what it is being used for and its potential to discriminate against people with protected characteristics. The Data Protection and Digital Information (No. 2) Bill will create new rights where wholly automated decision making is involved, but the question is: how will someone know when a fully automated decision has been taken if they are not told about it? Is there not a risk that many employers will slot into the terms and conditions of employment a general consent to automated decision making, which will remove the need for the person to be notified all together?

A successful AI strategy for this country should not be built on the back of the poor treatment of workers, and it is the Government’s role to create a legal and regulatory environment that shields workers from the most pernicious elements of these new technologies. That cannot be fixed by introducing single policies that tinker at the edges; it requires a long overdue wholesale update to our country’s employment laws. As the Minister will know, our new deal for working people will set out a suite of policies that address that. Among other things, it will help to mitigate the worst effects of AI, and will introduce measures that include a right to switch off, which will guard against some of the egregious examples of AI being used to intensify people’s work.

As the organised representation of the workforce, trade unions should be central to the introduction of any new technologies into the workplace. Not only will that enable employers and their representatives to find agreeable solutions to the challenges raised by modern working practices, but it will encourage more transparency from employers as to how management surveillance and disciplinary procedures operate. Transparency has been picked up a few times and it is key to getting this right.

Artificial intelligence’s impact is already being felt up and down the country, but the Government have not been quick enough to act, and its worst excesses are already out there. The need for transparency and trust with technology is clear, and we need to make sure that that has some legislative backing. It is time for a Labour Government to clear that up, stand up for working people and bolster our labour market so that new technologies that are already with us can be used to make work better for everyone.

[The Parliamentary Under-Secretary of State for Business and Trade (Kevin Hollinrake)]

I am grateful to be called, Dame Maria, and it is a pleasure to speak in the debate. I congratulate the hon. Member for Birkenhead (Mick Whitley) on bringing this timely subject forward. I thought it would be appropriate to type his question into ChatGPT. I put in, “What is the potential impact of AI on the labour market?” It said, “AI has the potential to transform many aspects of the economy and society for the better. It also raises concerns about job displacement and the future of work.” That is it in a nutshell. It did not say that it was time for a Labour Government.

[Justin Madders]

Did the AI tell the Minister that the Conservative Government have got everything right?

[Kevin Hollinrake]

I have not actually posed that question, but perhaps I could later.

This is an important debate, and it is important that we look at the issue strategically. The Government and the Labour party probably have different approaches: the Labour party’s natural position on this kind of stuff is to regulate everything as much as possible, whereas we believe that free markets have had a tremendous effect on people’s lives right across the planet. Whether we look at education, tackling poverty or child mortality, many of the benefits in our society over the last 100 years have been delivered through the free market.

Our natural inclination is to support innovation but to be careful about its introduction and to look to mitigate any of its damaging effects, and that is what is set out in the national AI strategy. As we have seen, it has AI potential to become one of the most significant innovations in history—a technology like the steam engine, electricity or the internet. Indeed, my hon. Friend the Member for Folkestone and Hythe (Damian Collins) said exactly that: this is like a new industrial revolution, and I think it is a very exciting opportunity for the future. However, we also have key concerns, which have been highlighted by hon. Members today. Although the Government believe in the growth potential of these technologies, we also want to be clear that growth cannot come at the expense of the rights and protections of working people.

Only now, as the technology rapidly improves, are most of us beginning to understand the transformative potential of AI. However, the technology is already delivering fantastic social and economic benefits for real people. The UK’s tech sector is home to a third of Europe’s AI companies, and the UK AI sector is worth more than £15.6 billion. The UK is third in the world for AI investment, behind the US and China, and attracts twice as much venture capital investment as France and Germany combined. As impressive as they are, those statistics should be put into the context of the sector’s growth potential. Recent research predicts that the use of AI by UK businesses will more than double in the next 20 years, with more than 1.3 million UK businesses using AI by 2040.

The Government have been supporting the ethical adoption of AI technologies, with more than £2.5 billion of investment since 2015. We recently announced £100 million for the Foundation Models Taskforce to help build and adopt the next generation of safe AI, £110 million for our AI tech missions fund and £900 million to establish new supercomputer capabilities. These exascale computers were mentioned in the Budget by my right hon. Friend the Chancellor. These developments have incredible potential to bring forward new forms of clean energy, and indeed new materials that can deliver that clean energy, and to accelerate things such as medical treatment. There are exciting opportunities ahead.

If we want to become an AI superpower, it is crucial that we do all we can to create the right environment to harness the benefits of AI and remain at the forefront of technological developments. Our approach, laid out in the AI White Paper, is designed to be flexible. We are ensuring that we have a proportionate, pro-innovation regulatory regime for AI in the UK, which will build on the existing expertise of our world-leading sectoral regulators.

Our regulatory regime will function by articulating five key principles, which are absolutely key to this debate and tackle many of the points that have been made by hon. Members across the Chamber. Regulators should follow these five principles when regulating AI in their sectors: safety, security and robustness; transparency and explainability; fairness; accountability and governance; and contestability and redress. That feeds into the important points made by my hon. Friend the Member for Watford (Dean Russell), who held this ministerial position immediately prior to myself, about deception, scams and fraud. We can all see the potential for that, of course.

Clearly, right across the piece, we have regulators with responsibility in those five areas. Those regulators are there to regulate bona fide companies, which should do the right thing, although we have to make sure that they do. For instance, if somebody held a database with inappropriate data on it, the Information Commissioner’s Office could easily look at that, and it has significant financial penalties at its disposal, such as 4% of global turnover or a £17 million fine. My hon. Friend the Member for Watford made a plea for a Turing clause, which I am, of course, very happy to look at. I think he was referring to organisations that might not be bona fide, and might actually be looking to undertake nefarious activities in this area. I do not think we can regulate those people very effectively, because they are not going to comply with anybody’s regulations. The only way to deal with those people is to find them, catch them, prosecute them and lock them up.

Unpaid Work Trials

Justin Madders Excerpts

Wednesday 29th March 2023 Westminster Hall

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

It is a pleasure to see you in the Chair this afternoon, Mr Hollobone. I thank the hon. Member for Glasgow South (Stewart Malcolm McDonald) for securing the debate and for the work he has done over six years to try to deal with this wholly egregious situation.

We can probably start on a note of common concern, because every right-minded person would regard it as wrong that workers should be expected to work for free. In many cases, as we have heard, they actually end up out of pocket after working a trial shift. I firmly believe that we should all adhere to the principle that there should be a fair day’s pay for a fair day’s work, and any action to stop exploitation—whatever form it takes—should be welcome.

As we have heard, there clearly ought to be means by which an employer can test an individual’s suitability for a position, but—call me old-fashioned—I have always thought that that was what a job interview was for. If not that, what about a paid probationary period for someone to be assessed for their suitability? Let us not forget that people have to work somewhere continuously for two years before they get any protection against unfair dismissal, which could be seen as a very long trial period, albeit one that is paid. When we consider the many options available to employers to assess the suitability of potential employees in the round, we inevitably get drawn to the conclusion that, in the main, trial shifts are not necessary—certainly not unpaid ones. When we are confronted with the evidence that we have heard today and on previous occasions, the suspicion continues to grow that they are often used as a quick way to get free labour.

We have to ask what is being done to stop jobseekers being exploited. Although it is welcome that the Government have published guidance on the practice of unpaid trial shifts, it is not worth the paper it is written on without proper enforcement. There is a problem with both the wording of the guidance and the Government’s general attitude to upholding UK employment law. In particular, I have concerns about the fact that, as the guidance notes, there are no definitive rules or tests for whether a trial shift is legal.

As we know, there are six factors in the guidance that a court or tribunal will consider when making a judgment about whether a trial shift should be paid. I ask the Minister to consider how many people have the legal knowledge, patience, time or money to pursue an employer for a handful of hours of lost earnings at the tribunal, particularly if they are in a legally vulnerable position from having no employment protection at that point. Does the Minister agree that the threat of being taken to a tribunal for an unpaid trial shift is self-evidently a hollow threat to employers, and that the Department should be much more proactive in pursuing complaints on behalf of workers? Does he agree that, given that the majority of people in these sectors are young people, because of the nature of the work, and are unlikely to be members of a trade union, they need support in enforcing their rights?

Let me give an example from my own family of what is probably a pretty typical situation. My son has plenty of experience working in bars—quite often in Glasgow, actually. He has applied for various jobs in bars, including one at a bar in Chester. He had an interview. He has all the experience needed to work there, but was offered a trial shift despite the fact that he clearly could do the job. It transpired that the trial shift would run for eight hours and finish in the early hours of the morning, when there is no public transport, so he would have to pay for a taxi out of his own pocket to get home. That looked to me like blatant exploitation. Luckily for him, his father was the shadow employment rights Minister so he could be guided on what to do in that situation, but it begs the question: how many other times have they gotten away with that? How many hours each week are young people being asked to work trial shifts for which they get no payment? The Minister should be tasking his officials with trying to find out exactly how many times this happens each week, because we are probably seeing only the tip of the iceberg.

[Kevin Hollinrake]

What guidance did the hon. Member give his son in that situation? I would be interested to know.

[Justin Madders]

I am not sure Hansard can record in a polite way the suggestion that I conveyed to him. Let me put it this way: the employment relationship did not continue.

The six factors contained in the guidance are useful, but a lot of subjectivity is applied to them. For example, how is observation—which is one of the criteria—defined? How long is a reasonable period of observation? Ultimately, how can a jobseeker be expected to know if their employer has acted in line with the guidance, given how ambiguous it is? The ACAS website does not make any reference to trial shifts at all. People need a lot more support to understand when they are being asked to do something that is unlawful.

Ambiguities aside, the guidance needs to be properly enforced. As has been mentioned, we have this figure of £3 billion for unpaid work in various forms—it is probably is an even greater figure now. The continued reliance on an underfunded and overstretched tribunal system is failing our workers. Surely it is time for a single enforcement body to follow through for workers to ensure that their rights are enforced. I know the Government promised that along with an employment Bill, which we unsurprisingly have touched on. Will the Minister give us a timescale for when this single enforcement body will emerge?

The Government’s record on national minimum wage enforcement in recent times has been concerning. A naming and shaming list has not been published since December 2021, and I know the Minister has expressed his support for that as an important pillar of enforcement. As I have mentioned to him on previous occasions, a number of Departments have awarded lucrative contracts running into the hundreds of millions of pounds to companies that have appeared on the list of shame. What kind of message does it send to companies about the importance that the Government place on enforcement of the national minimum wage if they are then rewarded with Government contracts? I hope the Minister can give us an update on when the next list will be released.

In conclusion, the debate is a useful reminder that this is unfinished business. We can see very clearly how current ambiguities are being used to exploit workers. I want to hear from the Minister about what more can be done to ensure that people get paid for the work they do, and to ensure that these ruses, in all their forms, are put to an end, so that we get to a point in this country where a fair day’s work means a fair day’s pay.

Draft National Minimum Wage (Amendment) Regulations 2023

Justin Madders Excerpts

Monday 6th March 2023 General Committees

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

It is a pleasure to see you in the Chair this evening, Mr Hollobone.

I thank the Minister for setting out the regulations. Their purpose is to update the National Minimum Wage Regulations 2015 for the various age groups and categories of worker that the Minister set out, as well as to make adjustments for apprentices and the daily living accommodation offset rates. To be clear, we will not oppose the regulations; any rise in the minimum wage is a welcome step, particularly in the context of the spiralling inflation of the past year. I am sure that many workers are anticipating—indeed, counting on—the rises that we have heard about today.

The Minister said that this is the most generous increase in cash terms that we have seen. Obviously, that has to be looked at in the context of an inflation rate at a 40-year high. Last year, I raised concerns that the increases then were not calibrated to the cost of living, which had sharply increased in the weeks before the relevant regulations were announced, so it is welcome that the Low Pay Commission was able to factor in the high inflation on this occasion.

However, I am concerned that only the rate for 21 and 22-year-olds has been increased at a level comparable to inflation, with the 10.9% increase. The other wage categories have increased by 9.7%, which is actually 0.4% below the 12-month inflation figures released by the Office for National Statistics in January. We know that the cost of living for many people is significantly higher than that. Food, fuel and housing costs have increased at steeper rates. Food inflation is at about 17.6% and, according to a House of Commons Library report published two weeks ago, domestic gas and electricity prices have risen by 129% and 67% respectively.

On top of all that, private rents have reached a record high, including through a 16.1% rise in London rents in the last 12 months. On average, monthly mortgage payments have increased by £500 because of the Budget last autumn. The cost for people of sustaining the basics of everyday life, be it food in their stomach, a roof over their head or keeping warm, has skyrocketed. We agree that the regulations will take some steps to address the situation, but there is still quite a gap.

The Minister referred to the intention to have the national living wage reach two thirds of median earnings by 2024; in the current economic climate, does he still consider that aim to be achievable? He said that the target is subject to the prevailing economic conditions; does he consider the outlook over the next 12 months to be conducive, or otherwise, to meeting that target?

It is disappointing that the Government have once again not addressed the inequities of the minimum wage age limits. People’s age should not determine the price of goods and services, and it certainly should not determine their income. The decision to retain the different age rates is even more unfair given the cost of the basics that I have outlined, particularly the cost of energy, food and fuel. It should be noted that the number of young people on zero-hours contracts has risen again, with the proportion of 16 to 24-year-olds on zero hours contracts now at the highest level since 2013, and with a 4% increase in the last year of people in that age group looking for additional work. It seems that the younger generation is once again bearing the brunt of the current inequities in the workplace.

The Opposition value equally the contribution of people in work. It does not seem fair that two people who perform the same role should be paid differently because one is 24 and the other is 21. It is not fair that the year of someone’s birth will determine the rate of a wage increase or, as we have seen in respect of inflation, a real-terms cut in pay. Only 21 and 22-year-olds will see their pay rise at a rate equivalent to inflation; those on the national living wage aged between 18 and 20, and 16 and 17, as well as those on apprentice rates, will see a smaller increase. I understand that the purpose of giving 21 and 22-year-olds a higher rate of increase is to smooth their transition to the national living wage, but it means that is the only group to see a real-terms pay increase this year.

[Andy McDonald]

I wonder whether my hon. Friend can help me. Does he find it as inequitable as I do that there is prejudice against young people in the workplace? They do not go into supermarkets and find that goods are priced at a lower level because of their age, so how on earth can it possibly be justified that they should receive a lower rate of pay for the work that they do opposite somebody 10 years their senior?

[Justin Madders]

That is exactly the point: the expenses faced by people who live independently are the same regardless of their age. That is why the current differences are indefensible.

On the differences in the increase, will the Minister say a few words about why the accommodation offset is going up by only 4.6% this year? That is considerably below the other rates. I understand that there is a review going on in that respect.

The impact assessment states that the tight labour market has caused nominal wages to increase, particularly among the lowest paid. It says that many businesses consulted by the Low Pay Commission said that better wages are used to attract and retain their workforce. Alongside good working conditions, we believe that is central to good employment practice. However, I have heard from representatives of certain sectors that some do not treat the minimum wage with the importance that others do. When we met in Committee to discuss the relevant regulations last year, it was noted that non-compliance was greatest in the hospitality and care sectors. Will the Minister tell us what steps have been taken to deal with non-compliance in those sectors?

There is a particular concern that domiciliary care workers are not being paid for the time spent travelling between locations, thus causing their wages to fall below the minimum wage levels. I hear—a recent Unison survey confirmed this—that about 73% of care workers are not paid for their travel, and Unison estimates that that affects between 155,000 and 220,000 workers. The impact assessment is correct that some sectors use high wages to entice workers, but it is clear that some in the care sector are not doing that. The abuse of travel time means that the minimum wage is not being paid to hundreds of thousands of people.

I understand that, because of the fragmented work patterns, carers’ pay calculations are highly complex, and hundreds of time fragments per day are to be accounted for. That means it can be very difficult for people to ascertain whether they are being paid the minimum wage. Of course, it is possible under section 10 of the National Minimum Wage Act 1998 to get the pay records and inspect them, but I am told that those requests are frequently ignored, and information is often provided in a form that is difficult to decipher. Even pay experts sometimes find it hard to understand what pay is being received.

Employers are obliged to keep sufficient records, but there is a grey area in respect of what the standard constitutes in reality and, of course, the guidance can be ignored. No employer in the care sector has been prosecuted for poor record keeping, despite the high number of compliance failures and the clear evidence produced in the survey. Will the Minister talk to his officials about what more can be done to address the widespread abuses in the care sector, which deserve closer examination?

We should not forget that the minimum wage does not cover everyone. It does not cover the self-employed, many of whom do not receive the minimum wage. What is being done to address that? What is done to address the issue of people who are in bogus self-employment who do not get the minimum wage but, because the people who hired them are gaming the system, have no ability to challenge their pay and do not appear in any statistics? What steps are being taken to help those who are exploited because they are engaged on an internship that stretches out for months without pay? What about those who have to do a trial shift and work for eight, 10 or 12 hours, only to be told at the end that they are not required and will not get paid? Those are all abuses of the minimum wage and I want to hear from the Minister what is being done to tackle them.

Enforcement is key. If we are to have confidence that the regulations will benefit all our constituents, we need to be confident that they will be properly enforced. This year is the 25th anniversary of the Labour party having established the principle that workers are entitled to a minimum wage in law. It is important that the Government ensure confidence in the system by bringing to task unscrupulous bosses who exploit their workers. The law is positive only if it is enforced. The past 25 years have made a lot more employers consider the law when they pay their workers, but they have not ended the existence of unscrupulous bosses altogether.

One of the most crucial elements of the legislation is the need to tackle businesses that flout minimum wage regulations. The Minister understands the importance of enforcement because on 23 February he told me in a written answer to one of my questions that the naming and shaming of employers who fail to pay the minimum wage is an “important part” of enforcement and compliance. He is right about that, because companies should expect to be found out and called out when they underpay their staff, but given it is such an important part of the Government’s strategy, why has not a list of shame been released since the previous time the relevant regulations were debated? Given that the lists are supposed to be published on a quarterly basis, a hiatus of a year and a quarter since the last one, with no explanation, is concerning, so I hope the Minister will address that point when he responds.

The delays in publication have serious implications. The December 2021 round of naming included only investigations that had concluded back in 2018, and some of those had looked into breaches that went back almost a decade. We now have no publicly accessible register of firms found to be underpaying staff since before the covid pandemic. We all know that the labour market has changed drastically in that time, so it really is important that we get on to round 19 as soon as possible.

Leadership and setting an example are important. Naming and shaming is one thing; modest fines are another. If transgressors are allowed to continue to procure lucrative contracts from Government Departments, it could be said that the consequences of their actions are light. When handing out work to the private sector, the Government have billions of pounds at their disposal to distribute. Whether such reliance on the private sector is a healthy or wise option for the Government is a matter for another debate, but at the very least I would hope that those found not to be paying the minimum wage are at the back of the queue when it comes to handing out Government contracts, if not removed from the queue altogether.

It seems the Department for Business and Trade does not even bother to ask itself the question when contracting with the private sector. In response to a recent written question on whether the Department has issued any contracts in the last three years to companies that had appeared on the list of shame, the Minister told me that he

“does not hold information about the number of named employers who have a contract with a Government Department.”

He cannot stand up today and categorically tell us whether his Department has or has not contracted work with a company found to be illegally underpaying its workforce. How can the Department responsible for ensuring that businesses in this country comply with minimum wage requirements be unable to confirm something so basic and so important? Is compliance not a question worth asking of those who receive taxpayers’ money to undertake Government contracts?

There are concerns about other Departments that have sought to engage with companies that have appeared on the list of shame. I will not go through them all now, but it is important that the Department responsible for enforcing the minimum wage should look closely at whether the people it engages are paying it.

[Andy McDonald]

My hon. Friend makes an important point that speaks to the lack of commitment from the Government, given their previously expressed view to create a single enforcement body that could have embraced the enforcement of the national minimum wage. Is he as disappointed as I am that we still do not have any clarity from the Government on whether that single enforcement body will be formed?

[Justin Madders]

My hon. Friend is absolutely right about the questions in respect of the level of commitment. When I was preparing for today’s debate I looked back at previous discussions, and the Minister has always talked about the single enforcement body. We have not heard any of that from the Minister today. Perhaps he will confirm that it is still the Government’s intention to introduce a single enforcement body. They will have to table legislation to do that, so we might yet be disappointed. Will the Minister confirm, in the light of the answers we have received, that he will undertake a full investigation and ensure that in future those who do not pay the minimum wage face further scrutiny before they are given Government contracts?

As I hope to have demonstrated today, legal minimum levels of pay are not the whole solution to low pay, but they are an important part of it. Trade unions, as the collective voice of workers, also play a vital role in securing better working conditions. I hope that one day we have a Labour Government who will help all our constituents to receive the pay and conditions that they deserve.

--- Later in debate ---

[Kevin Hollinrake]

I thank hon. Members for their valuable contributions during today’s debate. As has been pointed out, these rises are more important than ever in the context of the continued high inflation and cost of living pressures. I am glad to see cross-party agreement—largely—on the issue.

A number of points were raised, principally by the shadow Minister, the hon. Member for Ellesmere Port and Neston. When the Low Pay Commission made the recommendation of 9.7%, which we fully accepted, inflation was at 8.9%, so the rise was greater in most cases than inflation at the time. As the hon Member for Ellesmere Port and Neston knows, this Government are committed to halving inflation by the end of the year, so lots of people who received those high pay increases, in percentage terms, will benefit even more as a result of reduced inflation and a growing economy. Creating more jobs is very important and eventually leads to high wages, as my hon. Friend the Member for Basildon and Billericay pointed out.

[Justin Madders]

I am grateful to the Minister for explaining that the Low Pay Commission recommended an above-inflation pay rate. We often hear from Ministers that one reason that they cannot accede to pay demands from various public sector unions is that anything approaching the inflation rate would boost inflation even higher. Does that not apply in this situation?

[Kevin Hollinrake]

No, because this applies to a much smaller cohort. If the hon. Gentleman is proposing that we pay everyone across the public sector an inflation pay increase, which I guess he is from his comment, he has to explain to the taxpayer how we will raise that £28 billion a year, because that is what it would cost. Obviously, the Low Pay Commission works with employer groups, but it also works with business groups, other stakeholders and other employers to try to strike a balance between what is affordable for employers and what is an appropriate rise for those at the bottom of the income scales.

The hon. Gentleman asked about our ambition to get to two thirds of the median salary by 2024. That is certainly what we believe to be attainable, and it remains our target. With the growing economy that we expect to see by the end of the year, the economic context will be a lot brighter than it has been over the last few months.

On age limits, the hon. Gentleman is right; our ambition is to lower the age limit in terms of access to the national living wage, as we did from 25 to 23 in 2021, based on the Low Pay Commission’s recommendation. We are hoping to lower it to 21 by 2024. Part of the reason that it is lower—other Members asked the same question—is that there is no doubt that there is a greater vulnerability for young people. Unemployment levels tend to be higher in these lower age groups and it is important that we do not price people of low age out of the market. That is probably why Labour had different rates for 18 to 21-year-olds when it introduced some of these provisions when it was in government.

Let me turn to zero-hours contracts. Only 3% of the population is on a zero-hours contract. Sixty-four per cent. of those people do not want more hours, so the contracts kind of work for both sides, but we recognise that there is an issue with exploitation in some situations and we are trying to create the conditions for a conversation between employers and employees while not putting too great a burden on employers. That is why we are legislating for a right to request predictable hours. We have already legislated for things such as exclusivity clauses, which are not allowed for zero-hours contracts. For those below the lower-earnings limit, there cannot be an exclusivity clause in a zero-hours contract.

On compliance, the hon. Gentleman was absolutely right. It is very important to us, which is why we have doubled enforcement since 2015. I have met His Majesty’s Revenue and Customs team to discuss that. I welcome the fact that they have put £100 million back in the pockets of lower-income workers since 2015 through their excellent work. The care sector is one of the sectors they look at all the time, and there was no differential between it and any other sector. As far as employment law is concerned, travel time to appointments should be covered within employment law when it comes to calculating the national minimum wage or national living wage.

We believe that internships should be paid positions and should be subject to the national minimum wage or national living wage, and that trial shifts should be no more than a few hours.