323C: After Clause 150, insert the following new Clause—
“Review of the Act(1) The Secretary of State must—(a) carry out a review of the operation and effect of this Act,(b) set out the conclusions of the review in a report,(c) publish the report, and(d) lay a copy of the report before Parliament.(2) The report must be published before the end of the period of five years beginning with the day on which this Act is passed.(3) The report must, in particular—(a) assess the extent to which the objectives intended to be achieved by this Act have been achieved, and(b) assess whether those objectives remain appropriate and, if so, the extent to which they could be achieved more effectively in any other way.(4) In carrying out the review, the Secretary of State must publish an invitation for interested parties to make submissions on the operation of the Act.”
My Lords, this amendment provides the means to check that the Bill, once enacted, achieves the purposes for which it is intended. It is a more comprehensive amendment than several that have been debated already, which provide for a review of certain provisions within 12 months of the Act coming into force. I shall argue that the relevance of the amendment goes beyond the Bill itself.
Too often in the past, legislative success for a Minister was seen as a Bill receiving Royal Assent. In evidence to the Constitution Committee’s 2004 inquiry into Parliament and the legislative process, former Clerk of the Parliaments Sir Michael Wheeler-Booth and Professor Vernon Bogdanor noted that,
“all too often, Parliament forgets about legislation once it has reached the statute book”.
Legislative success should be seen not as getting a Bill on the statute book but rather as delivering on what Parliament intended it to deliver.
As the then leader of the House of Commons, the noble Lord, Lord Hain, told the Constitution Committee,
“there is no point in passing legislation if it is not having the desired impact or it is having a different impact”.
Recognition of that point led the committee in its 2004 report to recommend that most Bills should be subject to post-legislative scrutiny within three years of their commencement or six years from their enactment, whichever was the sooner. In 2008, the Government accepted that Bills should normally be subject to review three to five years after enactment, a policy reiterated by Ministers in recent months. Indeed, in January this year, the noble Baroness, Lady Twycross, reported that the Cabinet Office had written to departments reminding them of the importance of post-legislative scrutiny.
In practice, not all Bills are subject to post-legislative review by departments. Some have undertaken thorough reviews, but the enthusiasm for completing them appears to differ between departments. Earlier this year, I asked whether the Government would encourage departments to emulate the Home Office, which had engaged in detailed post-legislative scrutiny of the Counter-Terrorism and Border Security Act 2019. There is a compelling case for ensuring that, in respect of certain Bills, post-legislative review is put beyond doubt through being embodied in the measures themselves.
My Lords, I welcome the opportunity to pay tribute to my noble friend Lord Norton of Louth. He is not only a great author and academic, but he is regarded as a world authority on constitutional issues, and he has certainly been described as the greatest living expert on Parliament, so we take very seriously his very constructive suggestion for post-legislative scrutiny.
However, I rise to speak to Amendment 335, standing in my name, which would introduce a sunset clause ensuring that the Act will expire after three years unless the Secretary of State demonstrates that it has led to a net increase in employment. I do so against a background of economic data emerging in recent months painting a deeply concerning picture of the UK labour market. The UK’s jobless rate ticked up to 4.6% in April, while payrolled employment has fallen sharply, according to official figures covering the period when the Budget tax hikes on businesses came into effect.
We had an understanding that some of us would attempt to put together an overall view of what is happening in the jobs market at present, but the response from the business community to this Bill has been unambiguous and deeply troubling. The Institute of Directors has published research showing that more than seven in 10 business leaders—72%—believe that the Bill will have a negative impact on the UK’s economic growth. This is not a marginal concern expressed by a vocal or unrepresentative minority; it represents a clear majority of all those who create jobs in our economy.
Even more alarmingly, half of business leaders reported that they would be less likely to hire new staff as a direct consequence of this legislation. Let that statistic sink in. We are therefore considering legislation that, according to those who make the hiring decisions, will directly reduce employment opportunities for British workers.
My Lords, I will pick up on a few of the points made by my noble friend Lord Hunt to support Amendment 335 wholeheartedly. In principle, I am in favour of sunset clauses because they help us to focus on a Bill not once but twice, as they will pass legislative scrutiny twice over, and they encourage us to make better law. There are very practical reasons for Amendment 335. We have a 4.4% unemployment rate—or we did up to November last year—and it is increasing, with 1.7 million people in this country unemployed.
This Bill, as we have heard time and again—I know the Government disagree, but the figures speak for themselves—will increase the cost of and burdens on employing people, restrict job entry and limit new posts being advertised. The number of job vacancy adverts is decreasing. Since the Government came to power, the tally I mentioned earlier—I am sorry to repeat it—is 115,000 jobs lost. At this rate, there is a very good reason to support such an amendment. I hope the Government will take on board that we must consider a sunset clause in case unemployment rises and employment levels go down significantly in three years’ time.
My Lords, I thank the noble Lord, Lord Norton, for tabling Amendment 323C and the noble Lord, Lord Hunt, for Amendment 335. I pay tribute to the expertise of the noble Lord, Lord Norton, in this area. I reassure the noble Lord that, despite Amendment 323C’s positive intentions, it effectively repeats what the Government already intend to do.
Our impact assessment sets out a clear plan to monitor and evaluate the effects of the Bill and its secondary legislation, following standard government practice. This approach will help us assess how well the measures are delivering on their objectives, inform future policy-making and review the real-world impact on all stakeholders, whose contributions we recognise as vital to the strength of our economy. As is standard practice, in line with our Better Regulation Framework obligations, we also intend to conduct a post-implementation review of the Bill within five years of Royal Assent. This will provide sufficient time to assess the policy’s effectiveness and gather sufficient data for evaluation purposes.
In the case of the fair work agency, ongoing oversight of employment rights enforcement is provided for in Clauses 91 and 92. They require the Secretary of State to publish a three-year labour market enforcement strategy and annual reports, which must be laid before Parliament and the Northern Ireland Assembly. Secondary legislation made under the provisions in this Bill will also be subject to the requirements in the Small Business, Enterprise and Employment Act 2015 regarding proportionate monitoring and review.
In addition, where further detail will be set out in secondary legislation, the majority of statutory instruments will be subject to the affirmative procedure, allowing both Houses to consider them in detail and providing Parliament with sufficient opportunity for scrutiny and debate. Furthermore, the Government will consult on many of the details to be set out in secondary legislation, listening to the expertise of business, trade unions and civil society to ensure that the details of the regulations are appropriate to the current needs of the labour market.
My Lords, I am grateful to my noble friend Lord Hunt of Wirral and the Minister for their contributions to this short debate. Obviously, I am very grateful for their opening comments; it seems to be something on which I have united the two Front Benches.
I am very grateful for the Minister’s considered response. I would prefer it to be in the Bill for the reasons I have given, but I feel I have achieved something this evening as she has come to the Dispatch Box and made the commitment she has, which is valuable because it ensures the Bill will be subject to a review of the kind I seek. Although I would have preferred that to be in the Bill, this short debate has achieved something.
If the Bill is subject to post-legislative review, it picks up on the points made by my noble friend Lord Hunt of Wirral because, with the claims he has made about the Bill, it will be a chance to test whether it has delivered. It is important that post-legislative scrutiny is thorough in the way that some departments most definitely have done it for some Bills, which I welcome. My whole point is to encourage that. It is something I will return to, not necessarily on this Bill but on others, to ensure we achieve the same result. I am grateful to the noble Lord and to the Minister for what they said and beg leave to withdraw the amendment.
323E: After Clause 150, insert the following new Clause—
“Substitution clauses and the definition of “worker” in app-based work(1) The Employment Rights Act 1996 is amended as follows.(2) After section 207B, insert— “Substitution
207C Prohibition of substitution clauses in platform-based logistics work(1) A relevant company must not include a clause in its contractor agreements that permits substitution in the performance of services, unless—(a) the company can demonstrate that such substitution is operationally viable and genuinely offered to all contractors, and(b) the identity of any substitute is subject to the same training, vetting and approval standards as a directly contracted individual.(2) A clause purporting to allow substitution that fails to meet the criteria in subsection (1) shall be unenforceable and void, and the individual shall be treated as a worker under section 230(3).(3) In this section—“dependent contractor” means a person who—(a) performs services arranged through the company’s platform;(b) is paid per task or service delivered;(c) is not classified as an employee or worker by the company;“relevant company” means a company that—(a) provides services in relation to food and beverage delivery, postal and courier operations, or private hire transport via a digital or app-based platform, and(b) engages more than 250 workers or dependent contractors globally.(4) A clause purporting to allow substitution that fails to meet the criteria in subsection (1) shall be unenforceable and void, and the individual shall be treated as a worker under section 230(3).”(3) In section 230 (employees and workers), after subsection (3), insert—“(3A) For the purposes of subsection (3)(b), a requirement to perform work personally shall be deemed to exist unless the right to substitute—(a) is genuine, exercised in practice, and not fettered by contractual or practical limitations imposed by the contracting entity,(b) is not subject to prior approval or vetting by the company, either directly or indirectly, and(c) forms a meaningful part of the way in which services are actually delivered.(3B) Where the work involves the use of a digital platform to allocate real-time, location-based tasks in sectors including—(a) food and beverage delivery,(b) postal and courier services, and(c) taxi and private hire operations,any contractual clause purporting to allow for substitution shall be treated as void and of no effect, unless the company can demonstrate that the right of substitution is genuine, practical, and routinely exercised.(3C) A substitution clause in a contract for services of the type described in subsection (3B) shall not, by itself, be sufficient to establish that an individual is not a worker.””
My Lords, the new clause proposed in Amendment 323E in my name has been given the rather surprising title “Substitution”, and one or two noble Lords may be wondering what that means, so I will try and explain. It refers to the substitution of people with the intention of avoiding paying tax, national insurance or anything else. It is a problem that has grown like Topsy over the last five years.
Noble Lords will remember how many times in the last year we have debated whether electric scooters should go on the road or the pavement and whether we should have electric bikes. More recently, we have been debating electric bicycles with big trailers behind them, usually pulling Deliveroo or something like that. While many of us think that it is a great idea to have green transport, when you start looking behind the way that this part of the industry is created, it does not look quite so good.
I am not going to go into the road safety element, because we are not in a road safety debate tonight, but there are other safety implications concerning the people who drive these vehicles. There are questions concerning, first, the extent to which they should be in the country at all and, secondly, whether they are paying the right amount of tax—and that is before we get into any other thing that might be driver related.
Noble Lords may have read a big spread in the Sun today, which I think is coincidental. It reads:
“Asylum seekers are cheating the taxpayer—with illicit Deliveroo and Just Eat accounts offered to them within ten minutes of asking”.
It goes on to explain that there are people selling Deliveroo driver accounts to migrants even while they are on the rubber dinghy coming across the channel from Calais. That makes it very nice for them, because they know they are being taken on and do not have to look for a job. That is one problem. I am not going to repeat the rest of the article as it will take all night, but it is well worth reading the reasons behind this.
9:00 pm
We have come up with a fairly complicated amendment for discussion this evening. If my noble friend the Minister, when he comes to reply, will accept that we need to go into this further, I hope he will be prepared to meet me and my advisers to say, if he does not like what is here, what we will do to make sure that everybody is operating in the best way legally.
I am afraid that my comment is against many comments from many Ministers of this Government and the last one, asking, “Why don’t you do something about the electric scooters and the people who go through red lights, knock down pedestrians and everything else?” The only answer we get is that it is too difficult. This is not the same as that; it is too difficult, but it is in a separate box, if you like. I still believe that, if Ministers were really keen to make sure that people paid their taxes and everything else, it might actually dissuade one or two people from trying to cross the channel. I know that this is something that the Prime Minister is very keen to do, and so am I.
20 of 109 shown
There are precedents for including within a Bill a provision for post-legislative scrutiny. The most recent incidence is the Football Governance Bill. The Government, to their credit, accepted the argument that the Bill should provide for post-legislative scrutiny and brought forward their own amendment on Report to give effect to that proposal. The wording of my amendment may appear familiar to the Minister as it is taken from the Government’s amendment to the Football Governance Bill.
Bills that meet certain criteria should contain such a provision. The criteria I propose are that the Bill is large, is complex, makes substantial changes to the law, is contested and has not been subject to pre-legislative scrutiny. Bills that meet some but not all of the criteria may be considered for incorporating such a provision. A Bill that is not large but meets the other criteria should normally be considered for embodying provision for such scrutiny.
Each year your Lordships’ House usually appoints a special inquiry committee to engage in post-legislative scrutiny of an Act or group of Acts, such as the Mental Capacity Act or adoption legislation, that generally do not meet any of the criteria I have mentioned. That we select measures of this type for such scrutiny is not an argument against enshrining post-legislative scrutiny in some Bills but rather the reverse. We steer clear of Acts that are large and contentious. We are not likely to select the measure before us for post-legislative scrutiny in a few years’ time. Our scrutiny should complement that undertaken by government of measures covered by these criteria.
The arguments for post-legislative scrutiny of major Bills are several. There is the effect on drafting—knowing that a measure will subsequently be subject to review helps to concentrate the minds of Ministers and drafters in preparing the Bill. It serves to prompt a clear adumbration of purpose—of delineating the basis on which one will know whether the measure has achieved what it was designed to do. Perhaps most importantly, knowing that it will subsequently be reviewed may serve to reassure critics of the measure. That was especially helpful in the context of the Football Governance Bill. I think it applies in the case of this Bill.
Above all, providing the means of checking whether a measure has or has not met its aims and identifying what needs to be done to rectify any problems with its delivery contributes to good law. The Office of the Parliamentary Counsel has previously defined good law as law that is
“necessary, effective, clear, coherent and accessible”.
I have defined it as law that is well intentioned, well drafted and well implemented. Some of these features need to be checked during the Bill’s passage, but others, especially being effective or, in my terms, well implemented, are best tested through post-legislative scrutiny. As one Minister told this House’s Select Committee on the Mental Capacity Act 2005,
“while getting the Act onto the statute book had been a success, ensuring that it was fully implemented and understood was ‘work in progress’”.
This Bill clearly meets the criteria I have outlined. It is large, complex, makes a substantial change to employment law, is clearly contested and was not subject to pre-legislative scrutiny. The Committee has considered more than 330 amendments over 11 days. There are clearly disputes about the principles it embodies and its effect. Putting a provision for post-legislative scrutiny in the Bill, thus ensuring such scrutiny, meets the purposes I outlined.
The Minister may remind us that the Bill will be eligible for post-legislative review in any event, but this amendment puts it beyond doubt. If the Government have confidence in the Bill, they should have no problem in accepting the amendment. Critics may be reassured that, as with the Football Governance Bill, its effects will be reviewed. The amendment sets out the review to be undertaken before the end of a period of five years, and what the review in particular must assess. It also requires the Secretary of State to publish an invitation to interested parties to make submissions on the operation of the Act.
As I say, the provisions replicate those in the Football Governance Bill, omitting only the parts that are specific to football and do not lend themselves to replication in other measures. I urge the Government to build on what they have already achieved in the Football Governance Bill and establish best practice in embodying within this Bill provision for post-legislative scrutiny. Utilising the criteria I have detailed limits the number of Bills that merit such a dedicated provision. This Bill does merit such a provision, and I hope the Minister will demonstrate that the Government have the confidence to embrace it. I beg to move.
These employment figures do not exist in isolation. They form part of a broader pattern of economic decline that, sadly, has accelerated since this Government took office. The combination of increased employer national insurance contributions, the various tax rises announced by the Chancellor and now this additional regulatory burden create a perfect storm of disincentives to business investment and job creation.
We are now witnessing the practical consequences of economic policies cobbled together on the basis of wishful thinking and political prejudice by people with little or no first-hand experience or understanding of how businesses operate in practice. When costs rise, businesses must respond. They cannot simply absorb infinite increases in regulatory compliance, tax obligations and employment-related expenses. The rational response is to reduce costs where possible—and, unfortunately, employment costs are often the largest element in business operations as well as the most unpredictable.
Throughout the debates on this Bill, both the Ministers opposite and their colleagues in the other place have maintained that it will not harm employment. They have repeated this assertion with remarkable consistency, despite mounting evidence to the contrary. This represents either a fundamental misunderstanding of basic economic principles or a deliberate choice virtually to ignore inconvenient evidence.
The Government appear afflicted by a sustained delusion that they can simultaneously increase the costs and complexity of employment while maintaining that employment levels will be unaffected. This surely defies both economic logic and empirical evidence. It is rather like claiming that one can increase the price of a product while ensuring that demand will remain unchanged, simply by insisting that it must be so.
We have to entertain the possibility that we on these Benches are wrong. Perhaps the business community is wrong. Perhaps the Office for Budget Responsibility is wrong. Perhaps the employment statistics are, at best, misleading. Perhaps the correlation between increased business costs and reduced hiring is merely coincidental. Perhaps economic theory and established business common sense are for the birds. My amendment is designed to test the Government’s confidence. If Ministers are indeed confident that this Bill will benefit workers and boost employment, they should graciously accede to this amendment and demonstrate to us all their unshakeable iron confidence that this is not, after all, an unemployment Bill.
On Amendment 335, in the name of the noble Lord, Lord Hunt, we want to ensure that workers have these rights for life and not just three years, as the noble Lord proposes. As a result, we oppose his amendment. As is typical with employment legislation, further details on many of the policies in the Bill will be provided through regulations after Royal Assent. We will begin consulting on these reforms in 2025, seeking significant input from all stakeholders. We anticipate this meaning that the majority of reforms will take effect no earlier than 2026. We are committed to getting the detail right. This means listening to and incorporating a wide range of views into our policy development.
While headline statistics, such as employment and unemployment rates, may appear strong by historical standards, millions of workers are stuck in low paid, insecure and poor-quality work that is detrimentally affecting their financial stability and health. The UK’s productivity slowdown is more severe than in other advanced economies. A fragmented labour market and too much insecure work are holding back growth and investment. We also lag behind the OECD average on employment protections, and we have paid the price. The UK economy has not grown at the average rate of other OECD economies in the last 14 years, missing out on £171 billion-worth of growth. Average salaries have barely increased from where they were 14 years ago, and the average worker would be over 40% better off if wages had continued to grow as they did leading into the 2008 financial crisis.
This Bill will ensure a fairer, more equal labour market and deliver wider benefits to the business environment by improving well-being, incentivising higher productivity and creating a more level playing field for good employers. Consider a few of the changes it will bring: over 10 million workers in every corner of the country will benefit; increased well-being alone could be worth billions of pounds a year; there will be less workplace conflict, which costs UK employers about £30 billion a year; and up to 1.3 million employees will gain a new entitlement to statutory sick pay, increasing total sick pay by £400 million per year.
The noble Lord, Lord Hunt, spoke about the way businesses are perceiving this, but, as my noble friend Lord Leong said, business confidence is actually rising. The latest Lloyds Business Barometer survey shows business confidence at a nine-month high, with rising hiring expectations among businesses. I have to say to the noble Lord, Lord Hunt, that a sunset clause would create business uncertainty at the very time when we want to build on that confidence. The industrial strategy, which we published yesterday, has been welcomed by all sectors of business and will help to build that long-term strategy for growth.
Given the benefits the Bill will bring for workers over the long term, we oppose the noble Lord’s amendment and will continue to promote growth for businesses and the level playing field for good employers. With this in mind, I ask the noble Lord, Lord Norton, to withdraw Amendment 323C.
The other issue is that these drivers riding the bicycles seem to be very adept at getting their friends to substitute for them. The friends may have no qualifications, driving licence, residence or anything else, and are probably not recognised, so they carry on driving these things, frankly, illegally. That is before we get to the questions of why there is no enforcement in relation to these people’s driving ability or whether they should be here at all. I am not going to go into any greater depth on what is wrong. As we all know, this is a serious problem in London, but it is also a problem elsewhere.
The amendment is quite complicated, but then employment law is complicated. My friends in the cycling and walking community, who are really fed up with this, look upon this amendment as a matter of safety, but they also are asking, “Why should people get away with doing this when they probably are not paying tax or anything else?”
The wording of the amendment is designed to cover the most popular parts of the industry, such as food and beverage delivery, postal and courier delivery, and taxi and private hire operations, as well as probably many others. It is to make sure that, if people are hired by one of these companies to drive these vehicles and go on particular routes, they actually do it rather than subcontract the work to somebody else who has no qualifications at all. I have not yet seen any convictions for people found guilty of what you might call substitution, but I expect it will happen soon.