Unpaid Work Experience (Prohibition) Bill [HL]

Viscount Younger of Leckie Excerpts

2nd reading (Hansard): House of Lords
Friday 27th October 2017 Lords Chamber

[Viscount Younger of Leckie (Con)]

My Lords, I congratulate my noble friend Lord Holmes of Richmond on securing a Second Reading for his Private Member’s Bill. I commend him also for all the work he is doing to encourage a fairer and more balanced society for everyone, regardless of an individual’s background.

I start by declaring an interest in that I come to this topic with a business background, both in the City and financial services, and with over 30 years’ experience in HR, including recruitment. I wholeheartedly share in the spirit of this debate. It is not right that in 2017 people are being held back from realising their full potential because they are unable to access opportunities that are kept for the privileged few. I have listened carefully to some disturbing anecdotes this afternoon, not least from my noble friend Lady Stowell and the noble Lord, Lord Mitchell. As I am sure my noble friend Lord Holmes is aware, the Government are committed to giving everyone a fair start in our economy. This includes people from socially disadvantaged backgrounds; black, Asian and minority-ethnic groups; women; and of course young people.

I touch now on the great progress that the Government have made in creating a stronger labour market for younger workers. This group has seen a growth in median earnings which has been stronger than average. The unemployment rate for this group fell by 1.4 percentage points between quarter 2 2016 and quarter 2 2017. The employment rate for 21 to 24 year-olds is now at a record high of 80%. We have clearly demonstrated that an increasing minimum wage can go hand in hand with increasing labour market participation.

The principles of the national minimum wage remain the same today as when they were introduced by the Labour Party back in 1999. It was introduced and designed to protect the employment prospects of the lowest-paid workers while ensuring that they received fair pay for each hour they worked. In April 2016, this Conservative Government went one step further by introducing the national living wage, which gave over 1.7 million people aged 25 and over a pay rise, leaving them with more money in their pockets. It is right that we continue to seek independent and expert advice from the Low Pay Commission when setting these minimum wage rates. The Government will continue to set an hourly minimum threshold which employers must adhere to, while commending those employers who pay more when they can afford to do so.

I turn now to the essence of my noble friend’s Bill. I am supportive of the good intentions that underpin the Bill and agree that it is right to stop the exploitation of workers. Let me be clear that by “exploitation” I am referring specifically to individuals who are working and should be paid the minimum wage but instead receive less than the minimum or even nothing—and we have heard some stories this afternoon to that effect. The Bill is right also in its adherence to the principle of giving everyone equal access to opportunities. It is right that this Government champion diversity.

I acknowledge the words of my noble friend Lady Wyld, who stated that unpaid internships are an open secret. The Government recognise that unpaid work experience is an issue and are committed to stamping out this exploitation when an individual falls within the definition of a “worker” for minimum wage purposes. However, I hate to disappoint the noble Lords, Lord Mitchell and Lord Haskel—and there is a “however” to this. The current legislation already sets out that all workers are legally entitled to the minimum wage; and most importantly, as my noble friend Lord Flight said in citing the excellent example of Metro Bank, that entitlement applies from day one. The entitlement applies regardless of how the employer or worker describes the relationship in a contract, which can be verbal or written.

Most employment protections in the UK apply to individuals who are defined as an employee or worker. There is no statutory definition of work experience or indeed internships. However, if it were to be defined, it is likely that a new employment status would need to be created, which in itself would open the debate about whether we extend further protections to this new category, such as holiday pay and sick pay. A new employment status is likely to create unintended consequences, such as businesses not offering any work experience opportunities or, at worst, encouraging rogue employers to seek loopholes by offering work experience for less than four weeks—funnily enough, for three weeks and six days, as my noble friend Lord Flight hinted—which would mean that individuals were not entitled to the minimum wage from day one.

I took note of the interesting speech from the noble Lord, Lord Winston, but I agree on this occasion with the noble Lord, Lord Mendelsohn. On the one hand, I understand the point that the noble Lord, Lord Winston, made about his particular sector and its highly technical area, and I take into account what he said about the opportunities in the NHS leading to further time being needed. But I was disappointed not to hear—unless he chose not to say—whether the workers were paid any expenses at all. The noble Lord may like to clarify that later. I understand his angle and where he was coming from.

As my noble friend Lord Holmes mentioned, the voluntary sector has existing legislation that covers volunteers and voluntary workers. The noble Lord, Lord Mendelsohn, also raised that. The key for volunteers, who are not legally entitled to the minimum wage, is that they have the flexibility to come and go as they please and they do not have any employment contract to perform work or provide services.

This Government will continue to encourage work experience, internships and voluntary opportunities. We want to encourage initiatives that provide individuals with an opportunity to watch and learn, to try their hand at particular tasks or give something back to their community. These opportunities are vital to so many individuals up and down the country. Their scope is so varied. This flexibility is beneficial for individuals and employers.

I am keen to focus also on the issue of social mobility, which featured heavily in today’s debate. Increasing social mobility is a top priority for the Government. Social mobility is essential to make our country one that works for everyone, not just the privileged few. We want to create a society that is fair and rewards talent and hard work. The education system and employers must be part of the answer to that. It is important for employers to increase the diversity of their workforce. The best employers are already taking some important steps, including engaging and supporting young people in schools, introducing fairer recruitment practices, removing barriers, opening up alternative routes to entry and monitoring progress. But there is more to do to ensure that background is not a barrier to a good career, and this Government are taking that challenge seriously.

The Department for Education is committed to working alongside the Social Mobility Commission to tackle the barriers that can hold people back from fulfilling their ambitions. We value the wide-ranging work carried out by the commission, including its work on a Social Mobility Employer Index. The index is a joint initiative between the Social Mobility Foundation and the Social Mobility Commission, in partnership with the City of London Corporation. It ranks Britain’s employers for the first time on the actions that they are taking to ensure they are open to accessing and progressing talent from all backgrounds and it showcases progress towards improving social mobility.

My noble friend Lord Holmes asked about Whitehall’s record on unpaid internships. I reassure him that we are taking the opportunity to enable social mobility in Whitehall. The Summer Diversity Internship Programme is a multi-award-winning programme that gives individuals from diverse backgrounds the opportunity to see what a career in the Civil Service is like, and 100% of those surveyed would recommend it. I reassure the House that it is paid.

My noble friend Lady Brady raised the important point about careers advice. The Government are taking steps to improve careers education and guidance for all ages. We are investing more than £70 million this year to support young people and adults to get high-quality careers provision.

Activities involving employers such as careers insights, mentoring, work tasters and work experience are crucial to giving young people the skills they need to succeed. The careers statutory guidance makes it clear that schools should offer work placements, work experience and other employer-based activities as part of their careers strategy for years eight to 13 pupils. We are providing valuable support for schools through the Careers & Enterprise Company, which has been tasked with increasing the level of employer input into schools and colleges.

Part of the issue is enforcement. It is about enforcing the existing legislation to enable social mobility. To be clear: it is against the law for employers not to pay at least the minimum wage to workers. We want work to pay and to have zero tolerance for employers opting out of their legal responsibilities. This is part of the reason that we have increased HMRC’s enforcement budget to a record level of £25.3 million for 2017-18. These two points were raised by my noble friend Lord Holmes. We want to stamp out any temptation to pursue non-compliance, so we have increased the maximum penalty imposed on an employer. Last year the penalty doubled to 200% of arrears owed to workers up to a maximum of £20,000 per worker. We have also continued the Government’s naming scheme, which has become increasingly effective as a deterrent. We have named more than 1,200 employers to date and we can see its effectiveness from the number of representations we get from employers seeking to be exempt from the naming process. There is a growing realisation among employers that naming can damage brands.

We also recognise that we have a responsibility to make sure that individuals and businesses—

[Lord Mendelsohn]

I am sorry for interrupting the Minister, but in reciting those numbers about the budgets and enforcement measures that are available, can he state whether they relate to HMRC’s activities in general? Which part of the budget of those sums relates to interns?

[Viscount Younger of Leckie]

I will write to the noble Lord about the specific figures relating to interns. I sought to make the point in general that in having the naming scheme, when the names go up on the board or when they are broadcast, particularly in local newspapers, it is damaging in itself. It is perceived as being more damaging and obviously can sully the reputation of employers in terms of both recruitment and the products that they are selling.

We also recognise that we have a responsibility to make sure—

[Lord Flight]

My Lords, I thank my noble friend. Can he clarify a point? Is he effectively saying that in the future interns will count as workers? The problem, as I understand it, is that of greyness in the area.

[Viscount Younger of Leckie]

That is true, and the point I am making is that the existing legislation does allow for a distinction to be made between who is defined as a worker and who is not. I have already made it clear that there are employers who try to get around this, a point which has been made by other noble Lords. However, the law is clear: if there is evidence to show that an individual can be defined as a worker in that work is being done that is not work experience, actions can be taken.

[Baroness McIntosh of Hudnall (Lab)]

My Lords, I am sorry to press the noble Viscount on this matter. I have listened to the whole of the debate, and the issue of the law being in some way evaded has come up on a number of occasions, but it does not appear from what has been said that on every occasion when this happens, what is being done is evidently illegal. In other words, it appears that there are easy ways of moving around the obstacles that are put in the way by the current legislation. Can the noble Viscount tell us whether any employer has been prosecuted so far for evading the law in this way, and who is responsible for bringing forward a prosecution? I ask this because it appears from what has been said in the debate that the responsibility lies with the person who has not been paid or who feels themselves to have been disadvantaged.

[Viscount Younger of Leckie]

In response to the point made by the noble Baroness, there have been some prosecutions, and we think that they will increase as the measures that we are taking improve. It is true that if an individual undertaking work experience has an issue, they have the right to approach ACAS on a confidential basis, so they will be able to complain about the treatment they have received. I will come on to that because there is a little more that I can say about it. They can also go to a citizens advice bureau. The confidential aspect is terribly important. Another noble Lord made the point that it is not always very easy for a young person who is trying to get on to complain in that way, so there is more work to be done.

As a result of the additional resources that I have mentioned, HMRC has been able to effectively run the Promote programme. Promote provides information to both employers and workers to tackle non-compliance before it occurs. In 2016-17, the Promote team reached over 250,000 employers, workers and their intermediaries through a combination of webinars, targeted mailshots, face-to-face contact, digital contact and project work with specific sector bodies. We hope to see this number increase as the year progresses. We want to continue to support workers and businesses, particularly our small businesses, of which there are over 5.4 million. We want to raise awareness of the law to improve compliance so that business feels empowered to offer these types of opportunities to everybody.

I will give the noble Baroness a little more detail. ACAS offers a free and confidential phone line providing advice for workers and employers. Any worker who thinks that they may be underpaid or, wrongly, not paid at all should contact ACAS or Citizens Advice. We recognise that workers may not feel confident enough to make a complaint about their employer, especially if they are starting out in their career, as my noble friend Lord Holmes said. Therefore, ACAS offers a confidential service; the complainant can remain anonymous. If there is a case to answer, ACAS will forward the case to HMRC, which follows up every single complaint.

I turn briefly to the Taylor review, which was raised in the debate. As my noble friend Lord Holmes will be aware, the Government are committed to stamping out exploitative work experience. Earlier this year, the Prime Minister asked Matthew Taylor to run an independent review into the UK’s modern employment practices. Matthew looked at a number of themes, including the issue of unpaid interns. The report is comprehensive and detailed. I note that Matthew Taylor did not recommend legislative change but, instead, focused on increased enforcement—a point that I made earlier. However, the Government will give the review the careful consideration that it deserves and we will respond in full later this year.

In fact, Matthew Taylor’s recommendation is particularly relevant to this Private Member’s Bill—a point raised by my noble friend Lady Stedman-Scott. The report states:

“The Government should ensure that exploitative unpaid internships … are stamped out. The Government should do this by clarifying the interpretation of the law and encouraging enforcement action taken by HMRC in this area”.


I make it clear that I welcome the sentiments and intentions of my noble friend. Noble Lords should rest assured that we will create the conditions necessary for all workers to receive the minimum wage that they are entitled to. We want every individual to have the best chance in life. We also want every young person to have the opportunity to experience what the working world is like. My noble friend Lady Stedman-Scott raised the interesting idea of the Government perhaps working harder to penetrate so-called “opportunity areas”. I have taken note of her point and will pass it on to the relevant department.

[Baroness Morgan of Huyton]

With respect to the noble Viscount, can he explain more clearly why we should “rest assured”, as he said? In this debate there has been strong support from all sides of the House for a simple clarification and change to the law that will deliver what we are all seeking, which is the differentiation between work experience and an unpaid internship. However, nothing that the Government have done has changed the situation. In fact, if anything, it is getting worse—we have heard about lots of real-life examples in the House today. Therefore, with the greatest respect, I am not convinced that the Minister has set out anything that leaves any of us who have spoken feeling that we can rest assured.

[Viscount Younger of Leckie]

Two or three Peers have said that there are flaws in the Bill. I would not necessarily go that far, but the tenet of my argument is that it is enforcement that counts. As I said earlier, we are making great efforts to improve enforcement in this area. The point is that there has to be a distinction between the different types of work. If somebody is defined as a worker, they are doing work for which they should receive remuneration from day one; otherwise, we could be led to form a new definition of, say, a work experience worker, but I have made it clear that we believe there would be some unintended consequences in so doing.

[Lord Mendelsohn]

Will the Minister clarify—because, like Matthew Taylor, he mentioned making sure that the law is clear on this—and describe the difference between an internship as work experience and an internship as work?

[Viscount Younger of Leckie]

The description is that any complaint goes to HMRC and, if a complaint has been made, a distinction has to be made and HMRC has to take a view on whether meaningful work is being carried out—in other words, a nine-to-five day is being done, not just work experience where somebody is looking over somebody’s shoulder. That distinction has to be made. Again, I make the point that we could go down the route of having a new definition under the heading, “Work Experience”, but that would lead to all kinds of unintended consequences.

[Lord Flight]

I am sorry to bother noble Lords again. The fundamental issue seems to be whether the Government want interns to get paid. We all know what interns do. They are not workers because they are not on contract; but, if they are not paid, the problems we have all talked about arise.

[Viscount Younger of Leckie]

We are not taking a view on that. We are saying that there is no definition of work experience and it is left for others to decide whether the work is proper work that deserves remuneration or whether it comes under the description of somebody coming in for a couple of days and looking over somebody’s shoulder.

[Baroness Stowell of Beeston]

I wonder if I might assist my noble friend. One of the things I find quite helpful, from what he said in his remarks, is knowing that the Government are still considering how they will respond to Matthew Taylor’s report. I did not realise that until my noble friend said so. We have clearly had a very good debate, with some strong and forceful arguments. I would have thought quite a few of us would welcome the opportunity to sit down with the relevant Ministers—perhaps in BEIS—who are looking at and considering how to respond to the Taylor review, and have some real influence on the Government’s response to that set of recommendations.

--- Later in debate ---

[Viscount Younger of Leckie]

I am grateful to my noble friend for her helpful input. I was keen for the debate not to fall back on the Taylor review, because my noble friend is quite right that, as I have said, we are considering our response to it. I have been careful not to go either way. The debate is extremely helpful in allowing us to give a measured response. I take the point my noble friend made that responsibility lies with the business department—BEIS—but the DfE also has a strong input in a cross-departmental way.

Going back to the definition of work, it is explained in guidance. There is also a £1.5 million awareness-raising campaign to make people aware of what is and is not work. It boils down to that.