Zero-hours Contracts

Lord Stevenson of Balmacara Excerpts

Wednesday 29th June 2016 Lords Chamber

[Lord Stevenson of Balmacara (Lab)]

My Lords, I congratulate my noble friend Lady Quin on securing this debate. Hers was the first of a series of very powerful speeches, many of which drew on real-life experience. As a result of this short debate, we have generated a series of rather trenchant questions about government policy in this area, which I hope the Minister will be able to respond to in full.

The labour market context, according to a recent report from Citizens Advice, is that 4.5 million people in England and Wales are in some form of insecure work, just over 2.3 million people work in variable shift patterns and 1.1 million work on temporary contracts. I think we are now beginning to get a fix on what the numbers are in the area of zero-hours contracts, because the recent ONS report picks up 801,000 people working on zero-hours contracts, up from a figure which it derived from surveys in 2014 of 697,000. So it is a significant and rising proportion of our workforce.

In a recent report commissioned by the Labour Party from Norman Pickavance, the majority of employers were reported as not using zero-hours contracts, in most cases because they did not believe that they provided the right approach to flexibility or workforce management, something which I think we need to take hold of. It is of course the case that, as has already been said, when used appropriately, zero-hours contracts can aid short-term flexibility for some employers and employees, and provide increased choice for individual workers. However, zero-hours contracts are often used as crude cost-reduction tools and the lack of rules and safeguards governing their appropriate use leaves huge scope for abuse.

It is interesting to look at the distribution across the sectors of the economy. Zero-hours contracts are very significantly used in accommodation and food services, possibly because of supply chain pressures, and also in health and social work activities, where perhaps low pay is the driving issue. It is also important to recognise, as I think has been mentioned by others in this debate, that women are proportionately much more represented, with 53% of working women on zero-hours contracts, compared with 47% on non-zero-hours contracts. Of course, as has again been said, it affects younger people. Some 38% of people on zero-hours contracts are aged 16 to 24, compared with 12% in the rest of the employment sectors.

As my noble friend Lord Monks said, there is evidence that organisations use zero-hours contracts as a way of managing their entire workforce in place of good performance management systems, and that must be wrong. As my noble friend Lady Dean said—echoed, I think, by my noble friend Lady Warwick—zero-hours contracts create significant financial insecurity for employees, uncertainty around entitlement to benefits and the new, automatic enrolment system for workplace contributions, and generate higher workplace stress. They also lead to higher pressures for personal debt, as we have heard.

Zero-hours are disproportionately associated with low-value business models and low investment in training. That hampers social mobility, as people in those arrangements often struggle to find opportunities to progress to better paid and more secure work. The right reverend Prelate was right to warn us about the dangers that might arise from modern slavery considerations. Whatever tag we use, these contracts are not compatible with the goal to build a high-skills, high-wage economy, which I am sure we all wish to see.

My noble friend Lord Whitty called all these variations on zero-hours contracts a cancer on our society. They certainly need to be properly regulated, and I would be interested to know whether the Minister agrees with the suggestion made by my noble friend Lord Monks that it is time for a crusade to tackle inequality in the employment sector, starting perhaps with the exploitative use of zero-hours contracts.