Zero-hours Contracts

Simon Hughes Excerpts

Wednesday 16th October 2013 Commons Chamber

[Mr Umunna]

This is a key point. Will any job do? We are clear that any old job will not do. We want to ensure that people have decent work that is paid a salary they can live off and which is secure too. That has to be our ambition for the country.

I do not deny that these contracts have been in use for many years—I will turn to their use in the House a bit later—but until recently they were very much the exception to the rule. The problem is that now they are becoming the norm in some sectors, with the Chartered Institute of Personnel and Development estimating that up to 1 million people are on such contracts.

[Simon Hughes (Bermondsey and Old Southwark) (LD)]

The hon. Gentleman will understand that across the House there is concern—or there should be—about this issue, and I am glad that we are debating it. He touched on the point I wanted to ask him about. Will he confirm, however, that the Labour Government never addressed this issue by making it illegal, so it remained possible throughout the whole period of their Administration? Neutrally, does he have any objective, accurate statistics on the number of people affected by zero-hours contracts during the last Government and the number of people affected since 2010 under this Administration?

[Mr Umunna]

I will come to both those points in the remainder of my speech.

Some Government Members trumpet this insecurity and talk about it as evidence of flexibility in our labour market, and it is true that some workers like these arrangements, but for most working families they mean insecurity for them and their families and leave them subject to the whim and demands of their employer to work at short notice, so the flexibility is not a two-way street; it is a one-way street in favour of the employer, and that is insecurity writ large and totally unacceptable.

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[Mr Umunna]

I do agree, and I read my hon. Friend’s speech from that debate. She talked about what the Government are doing. The Secretary of State said he was carrying out an informal review, but given that that consisted of just three officials spending part of their time “speaking informally” with stakeholders—as he told me in answer to a parliamentary question that I tabled on this issue—that is clearly insufficient. Therefore, in August, I and the shadow employment relations Minister, my hon. Friend the Member for Edinburgh South (Ian Murray), formally convened a summit, involving more than 20 different organisations representing employers, employees, legal experts and people employed on zero-hours contracts, to hear evidence and consider what action should be taken to clamp down on their exploitative use.

Two things arose from the evidence we heard and the consultations we have been carrying out. The consensus across all stakeholders and groups was that the exploitative use of such contracts is a problem—everybody agreed with that—particularly in the care sector. Those looking after some of the country’s most vulnerable people are themselves vulnerable under these contracts. Given that it is important for those whom they are looking after to have stable and continuous care from people with whom they are familiar, I cannot see how that state of affairs can have anything other than a detrimental effect on the quality of care received.

That state of affairs creates issues for many local authorities because of the way in which social care services are commissioned. Many of them will tell us that it is helping to drive the use of zero-hours contracts in the care sector. They say—some would say that this is not an excuse, but an explanation—that they are left with no option but to commission in that way because of the huge funding cuts they have been subjected to under this Government. I understand the challenges that local authorities face—I think we all do—but I urge them to follow the example of Southwark council, which is working with providers to eliminate the use of zero-hours contracts, particularly in the care sector.

[Simon Hughes]

The hon. Gentleman is being generous with his time, and I am grateful to him for giving way on that point, which is directly relevant. He said he would come back to whether there were statistics on the incidence of this form of employment before 2010. To reinforce the point he is making, to my knowledge, the care sector has used zero-hours contracts for many years, under the Labour Government and this Government, and under local authorities of all political colours contracting services. There are real abuses, and if we can reach consensus, without partisanship, that one of the sectors in which we need to address them most urgently is the care sector, that will be a great service to some of the lowest-paid people doing the most difficult face-to-face jobs.

[Mr Umunna]

I think the right hon. Gentleman will agree that what Southwark is doing is a good thing. I note that he is agreeing with me.

The Office for National Statistics suggests that the numbers under the previous Government were around 140,000 across all sectors, although I acknowledge that the way it has collected those data has been somewhat faulty, in part because it relies heavily on people understanding what their contractual situation is. It is fair to say, however, that there has been a significant proliferation of zero-hours contracts over the past few years. The right hon. Gentleman talked about the care sector. The use of these contracts in that sector might have been a niche arrangement before, but it is certainly now becoming the rule. That is what we need to act on.

I do not believe that there is consensus on advocating an outright ban on these arrangements. There are people who want them, and there are employers who use them responsibly, but, as I said to the hon. Member for Beckenham (Bob Stewart), the key is to outlaw them where they are exploiting people. In doing that, we need to acknowledge the people who are doing the right thing as well as draw attention to those who are doing the wrong thing.

We should also acknowledge the need for this House to get its own house in order in respect of the use of zero-hours contracts. We know that there are people who look after us here and help us to do our jobs here who are engaged on those contracts. That is unacceptable. We should be setting an example. I know that this is being looked into at the moment, but we have not yet had a clear commitment from the House authorities not to use such contracts. I think that everyone would agree that we want to see their use in the House stamped out.

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[Vince Cable]

To help us move on from this point, let me say that I am the first Business Secretary out of the last seven or eight—I cannot remember exactly when the issue first came to the surface—who is actually taking action on the issue. Action will emerge from the consultation. We recognise that there is a problem and we recognise that there are some abusive situations, but we also recognise some positive things about zero-hours contracts, which I shall come to in a moment. We have determined to take action, and I am the first Secretary of State to have done so for a long time, after a whole series of Labour predecessors who, for whatever reason, decided not to.

[Simon Hughes]

I applaud my right hon. Friend for that. It is evident to people outside that there has been no action for many years and that now there will be. Before he completes his speech, will my right hon. Friend not only set out the timetable beyond the consultation plan, as far as he can envisage it, but say whether we can find a way of linking the discussion and review of the minimum wage with the zero-hours contracts issue? It is obvious from how the labour market works that these issues are interconnected, so it would be worth trying to bring those considerations together.

[Vince Cable]

Yes, and I hope that happens. I have made it clear to the Low Pay Commission that we want to look at the minimum wage in a somewhat more holistic way than has been the case in the past. Of course I cannot guarantee what the commission will conclude; that is not my job.

Before considering the advantages and disadvantages of zero-hours contracts, let me make a basic point that will probably explain why my Labour predecessors did not deal with the problem: it is intrinsically tricky. There is an issue about what zero-hours contracts actually are; they are not clearly defined. As the right hon. Member for Wokingham (Mr Redwood) said a few moments ago, we do not have a definition of exploitation, and we do not even have a definition of what a zero-hours contract is. There are a whole lot of contractual arrangements, which have two basic conditions attached to them. One is that there is no guarantee of work and no requirement under British employment law for an employer to provide a minimum number of hours. Equally, however, an individual is not required to accept an offer of work. Those are the two defining characteristics of a zero-hours contract.

A wide spectrum of practices has come out of that. At one end of the scale, we have casualisation of different forms—we have heard about the history of the docks and other similar traditions, many of which were highly undesirable. Equally, at the other end of the scale, however, there are large numbers of traditional systems of freelance-type employment—in the creative industries and education, for example. When I started thinking about this subject, I realised that my late wife spent much of her working career on a zero-hours contract working for a further education college. She taught music to sixth formers, depending on how many turned up for their classes. It was effectively a zero-hours contract. Many people in FE and adult education worked on the same basis, and this is established practice in many other industries. In these cases, it has not been viewed as a problem before.

I make that point to stress that the definition of a zero-hours contract is not precise. Hundreds of thousands of people—and if we believe the shadow Secretary of State, millions—are on these contracts, which vary enormously. Some people carry the rights attached to being a worker—[Interruption.] Well, Unite think it is 5 million people. Some people in these contracts have basic employee statutory rights attached to them as well. They are enormously varied.