Employment Rights Bill

Lord Frost Excerpts

Committee stage
Tuesday 29th April 2025 Lords Chamber

That also speaks to whether it is wise to load the business sector with so much in the way of new rules and regulations. I am sure that will be a theme of many of our debates, particularly in relation to small, micro and medium-sized businesses, as a number of noble Lords have already referred to, and I certainly look forward to that.

[Lord Frost (Con)]

My Lords, I support Amendment 1, although possibly not for quite the same reasons as those already expressed in this Chamber, and I regret I was not able to speak at Second Reading.

When dealing with a purpose clause, one cannot avoid spending a moment dwelling on the broader principles behind the Bill before coming to the amendment itself. It is worth noting that one of the reasons the British economy has surprised so many people over the last decade or so on the upside, despite all the gloomy predictions, is because it is an extremely flexible and responsive economy, particularly in the labour market. Most indices of these things put us in the global top 10 of labour market flexibility, which I regard as a good thing, although clearly many noble Lords who have spoken do not.

There is a paradox here, in that flexibility is the best way of delivering security—maybe not in any individual job, but security of employment and income over a period. The Government seem to think that the only way to ensure job security is to put in place more and more intrusive and detailed legislation to require it. That is why we are going to be discussing, no doubt at great length and with huge complexity, this massive Bill which tries to do just that. It is damaging that the Bill is being made up as it goes along to such a large extent; it just multiplies the complexity and difficulty.

I do not think that is the right way to look at job security. The best way to look at it is that flexibility produces security. If it is easier to change the terms and conditions of a job, or easier to dismiss people if they do not fit, then it is also easier to re-employ or shift resources from low-productivity to high-productivity sectors and to deliver growth in the economy. The approach in the Bill protects insiders at the expense of entrepreneurs and those who are outside the labour market, so it is not surprising that the representatives of trade unions are so supportive of it. The trade unions represent the insiders, but they are not the only people who have an interest in labour market flexibility.

I make these points because they go to the difficulty of drafting a satisfactory purpose clause for this Bill. It is desirable to have a purpose clause for something that is so complex and sprawling in the way it tries to legislate. The noble Lord, Lord Fox, has written it as cleverly and clearly as he possibly could in the circumstances. It is cleverly written, but the difficulty is not so much that it is not sufficiently exhaustive but that it contradicts the contents of the Bill. It sets out a number of things which the Bill simply does not do. For example, in paragraph (a) of the proposed new clause, it talks about “fairness”. Well, that may be fairness for employees on one definition but not for employers or those who are outside the formal labour market. Whose fairness are we talking about?

Paragraphs (b) and (d) in the proposed new clause do not “facilitate”—to use the word in the amendment—good labour relations; they actually make them more bureaucratic, complicated, difficult and hard to implement. Paragraph (c) makes provision for pay and conditions but, arguably, it should not be doing that at all—that is not the business of the Government but the business of employers and employees. The only one that is an accurate description of what is in the Bill is paragraph (e), the simple statement that it is to

“make provisions about the enforcement of labour market legislation”,

which it certainly does.

I am not sure that there is a satisfactory way of dealing with this. Nevertheless, I support this purpose clause amendment, because it seems to me that if it were to pass, the logical consequence, to be consistent, would be that large parts of the rest of the Bill would have to fall away to be consistent with the expressed purpose in this purpose clause. If the Bill were to be internally consistent with the things that we say are desirable, then much of this Bill is simply not consistent with that. Now, what goes first—the purpose clause or the rest of the Bill? I think we know how that is going to play out. Nevertheless, that is why it is difficult to get to a satisfactory purpose clause for this Bill. It would be good if much of the Bill fell away—no doubt we will come on to that in the next seven days—as it is going to cause a lot of damage to the economy and to growth.

To conclude, I support the amendment, if not perhaps for exactly the same reasons that others have supported it. It will enhance and make clearer, to some extent, what is a very sprawling, complex and unsatisfactory Bill.

[Baroness Coffey (Con)]

My Lords, I will speak to all of the amendments in the group. I spoke at Second Reading. As my noble friend Lady Noakes pointed out, we only had four to five minutes then, so this gives us an opportunity to consider further what the purposes should be. In the document published by the Labour Government, the Deputy Prime Minister and the Secretary of State for Business and Trade referred to the fact that this would be about getting more people into work. So far under this Administration, we have, unfortunately and regrettably, seen unemployment rise.

At the same time, comments have been made by noble Lords on the other side, such as by the noble Lord, Lord Monks, who referred to income inequality. What he may have forgotten is that, under the previous Labour Administration, income inequality rose. Meanwhile, under the recent Conservative Administration, income inequality fell. So, this is a case of trying to make sure that, as we take the legislation through, we focus on the outcomes it will have for people right across this country, rather than dogma. There is a combination of factors where, frankly, flexible labour has generally improved the prosperity of people in this country.

The noble Lord, Lord Hendy, complained that people in work were on universal credit. That is a large point of it. We have finally got rid of tax credits, which went earlier this month. Those had been introduced by previous Labour Governments in order to increase people’s pay—which employers were not doing. It was done in a rather crude way, such that capital was not taken into account. When we were moving people from tax credits to universal credit, we discovered—particularly early on, when we were doing some of our test and learn approach—that there were people with capital of over £100,000 who were still receiving tax credits and who decided that, although they would be entitled to one more year of such a transition payment, they did not think it was right to do so.

It is about that sort of element, of trying to consider what we want to see as an increase in prosperity and productivity. However, I am concerned, given the recent increase in unemployment and all the messages that we are receiving from businesses, small and large, that we will instead start to see a significant increase in unemployment and indeed more people going on to benefits. As I say, the whole point of universal credit is that you will be better off working than not working. The approach is to try and support people as they reach higher salaries.

My noble friend Lady Neville-Rolfe is right to say that, if we were considering further things to add to the proposed new clause set out in Amendment 1, competitiveness and growth should be there. I would add that the outcome should also be about increasing the number of people in employment. I know that the Secretary of State for Work and Pensions has set an exceptionally ambitious target of 80% of people being in work—which would be the highest in an exceptionally long time—but, to do that, she needs to work with other parts of her Government to make sure that more jobs will be created, so that people can go into those jobs at the rate that is set.

After thinking through what will happen with this legislation, I made the point at Second Reading that the Bill started off at 149 pages—and I am conscious of the 100-day deadline set by the Deputy Prime Minister to present it—and that it had basically doubled by the time it left the Commons. Not a huge amount of time was set aside for consideration of the additional 103 pages that were considered on Report there. As we have already heard, we are starting to see more amendments come in from the Government that this House needs to consider.