On 10th September 2021, the House of Lords debated the Status of Workers Bill in its second reading. The Bishop of St Albans spoke in support of the bill, which would seek to introduce greater protection for workers classified as “contractors” in the gig economy:
The Lord Bishop of St Albans: My Lords, I too congratulate the noble Lord, Lord Hendy, on tabling this Private Member’s Bill. It echoes the Judaeo-Christian teaching that workers deserve proper remuneration, and I support it.
I recognise that there are many advantages in having a flexible labour market which allows for individuals to tailor their work to their lifestyles. However, I and I know many others take issue with those times when employers curtail other people’s rights in an exploitative manor to reduce benefits costs. The Taylor review’s suggestion of replacing the category of working with a more positively defined “dependent contractor” was a positive step in preventing companies from unscrupulously categorising an employee as a worker while elevating the bogus self-employed into this category along with the increased rights it affords and the national insurance contributions that would accompany it.
When I read the very helpful brief from the House of Lords Library, I was struck by the estimates that bogus self-employment and the savings companies make by not paying national insurance probably result in the Government losing about £7.8 billion annually in national insurance contributions. While that is a guesstimate, it raises prescient questions about whether strengthening employment laws could raise some of the shortfall in national insurance that the Government hope to receive by means of their proposed 1.25% levy. Has the Treasury undertaken any internal economic modelling on the potential tax benefits in national insurance contributions of introducing a more clearly defined category of dependent contractor?
Of course, many of those who find themselves in the bogus self-employed category have been elevated to worker status on a case-by-case basis. However, the problem is that the legal onus is on those workers, in very precarious situations, to prove that they warrant those rights rather than on the immensely well-resourced companies. I therefore welcome the provisions in the Bill that place the duty to demonstrate that an individual is not an employee or worker on the company, not on the worker themselves. Shifting this responsibility—this legal duty—on to the employer is morally better than placing a burden on the least resourced to pursue legal recourse.
The CBI’s response to the consultation on employment status tried to defend these practices by highlighting that 53% of workers in the gig economy said that they were very or fairly satisfied by their work. That brings to mind some of those early-19th-century pamphlets which sought to claim that many slaves loved being in servitude. Just over 50% is not much to brag about, and, having tried to find the levels of UK job satisfaction in the rest of the population, which seems to be about 60% to 70%, the message is that gig workers have a much lower job satisfaction than other workers in the UK.
I hope Her Majesty’s Government will work with the Bill so we can see a new definition of dependent contractor or something else similar that deals with the current ambiguities and the problems they create. I believe this measure will end practices that exist within the UK labour market, and I give it my support.
Extracts from the speeches that followed:
Baroness Donaghy (Lab): I had the privilege to serve on the Personal Service Companies Select Committee, under the exemplary chairmanship of the noble Baroness, Lady Noakes. The committee expressed its concern that individuals working through personal service companies might not be aware that they had forgone at least some level of employment protection and benefits to which they would be entitled if they were in conventional employment. As my noble friend Lord Hendy said, the real employer is insulated against any responsibility whatever for their rights.
Were the Government concerned about the Select Committee’s work? The Treasury Minister refused point blank to attend the committee, despite requests from the noble Baroness, Lady Noakes. In the seven years since the report came out, things have got worse. The right reverend Prelate the Bishop of St Albans referred to lost revenue to the Exchequer. The taxpayer is subsidising the payroll bills of the unscrupulous employer.
Baroness Bennett of Manor Castle (GP): I will focus particularly on the construction industry because, both in your Lordships’ House and in society in general, there is very little awareness of the extreme precarity and forced fake self-employment circumstances in which 60% of manual construction workers find themselves. Now, my father was a builder; I know something about what life is like in the building trade. It is hard and still terribly dangerous, and I echo the comments of the noble Lord, Lord Whitty, about our utter failure to regulate so many aspects of employment, not just wages and conditions. The comments of the right reverend Prelate the Bishop of St Albans highlighted the way in which we have put so much pressure on workers to negotiate with their employers in conditions of extremely unequal power, knowledge and resources, and so are forced into unfavourable situations.
Lord Callanan (Con, Department for Business, Energy & Industrial Strategy): Turning to the contents of the Bill, I understand that the noble Lord, Lord Hendy, introduces this Bill to ensure that vulnerable workers are protected from exploitative practices. The Government share his concerns, which were also expressed by a number of other Peers including the right reverend Prelate the Bishop of St Albans, and it is clear that everyone deserves to be treated fairly at work and rewarded for their contribution to the economy, in terms of both fair pay and fair working conditions. However, the Government do not believe that this Bill is the best way to achieve this goal. I believe that creating a single worker status would inevitably stifle the flexibility and dynamism of the UK labour market when it is most needed to help the economy recover from the pandemic.
Lord Hendy (Con): My Lords, I am grateful for and humbled by the support around the House for the Second Reading of the Bill. I am grateful to all speakers who have contributed, particularly the noble Lord, Lord Moylan. Were it not for him, the heroic defence of the current situation by the noble Lord, Lord Callanan, would have stood alone.
It will be understood that I mean no disrespect by not summarising the elegant arguments put forward both for and against the Second Reading of the Bill, but I will take up just a couple of points. First of all, I would like to say how grateful I am for the support of the noble Lord, Lord Blencathra, and his reference to caring capitalism. Personally, I prefer caring socialism, but caring capitalism appears to be an achievable aspiration that is appropriate to aim for with this Bill.
I am grateful to the noble Baroness, Lady Greengross, for pointing out the particular vulnerability of young workers and older workers, and to the right reverend Prelate the Bishop of St Albans for expressing Christian support for the Bill and drawing to our attention the benefit to the state in increased tax and national insurance that would follow from the adoption of the Bill—a point reiterated by the noble Lord, Lord Balfe.
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