Zero-hours Contracts

 

This speech was given as part of an End-of-Day Adjournment Debate on 27 May 2015

 

Richard Bacon MP



Mr Richard Bacon (South Norfolk) (Con): I am pleased to have the opportunity to introduce the first Adjournment debate of the new Parliament. It was a pleasure to follow the hon. Member for Swansea West (Geraint Davies). I would love to tell him that the Scottish National party Members were sitting in their places because of the rumour that he was the most exciting speaker in western Europe, and that the right hon. Member for Gordon (Alex Salmond) was there because he wanted to hear every word the hon. Gentleman had to say, but in fact, I know that the right hon. Gentleman is sitting there with some of his colleagues because they want to hear what we on the Government Benches have to say about zero-hours contracts.

 

It may seem unusual for a Conservative Member to be raising this subject, which was controversial at some point during the general election, but at a time when the Labour party is unable to focus on any subject at all, as evidenced by the number of Labour Members now in the Chamber, it is left to the governing party, the Conservative party, and what I think they would probably call the real Opposition to focus on the issues that are important to the nation, and zero-hours contracts is one of those issues.

 

The expression “zero-hours contracts” is a colloquial term for a contract of service under which a worker is not guaranteed work and is paid only for work carried out. It is fair to say that such contracts have attracted both criticism and praise. Employer organisations tend to stress the role that zero-hours contracts can play in helping businesses to meet fluctuating demand, and they argue that such contracts play a key role in keeping people in jobs. Trade union campaigners and others emphasise how the financial insecurity of those people who are on zero-hours contracts limits their ability to rent property or to access loans or mortgages, so that it becomes more difficult for them to provide for their families, and that the general uncertainty facing workers on zero-hours contracts is compounded because such people are not defined as employees, which means that they do not qualify for most employment rights.

 

The Office for National Statistics has examined the matter to estimate the number of people who have zero-hours contracts, and it is fair to say that there is a little blurring at the edges about the accurate numbers, depending on how they are counted. The ONS has collected statistics based on the labour force survey, which asks workers rather than employers about their employment arrangements, and this suggests that there may be about 697,000 people on zero-hours contracts. A survey by the Chartered Institute of Personnel and Development produced a rather higher number of about 1 million, but the ONS thinks that that may overstate the sampling of large employers. None the less, there is a small but significant proportion of the total workforce of 31 million people—perhaps between 2.2% and 3.2%—who are on zero-hours contracts.

 

The workplace employment relations survey estimated that the proportion of workplaces with at least some workers on zero-hours contracts has doubled from 4% in 2004 to 8% in 2011, and what is particularly significant is the concentration of workers on zero-hours contracts in certain sectors. The Financial Times reported in April 2013 that there were more than 100,000 zero-hours contracts in use across NHS hospitals, the number having risen by 24% over two years. In the hotel and catering sector, some 53% of employers make at least some use of these contracts, and it has been estimated that some 61% of workers in the domiciliary care sector are on zero-hours contracts.

 

A social entrepreneur, Mrs Sheila King, in my South Norfolk constituency has told me of the great value of zero-hours contracts for small charities. Mrs King conceived and developed the Pennoyer centre in Pulham St Mary in my constituency. The centre, which is run as a local village charity, is in a building which is part derelict Victorian primary school and part 14th-century medieval guild chapel, and which is now, with the help of grants Mrs King secured from the Heritage Lottery Fund and other grant-making bodies, a multi-purpose village centre. It serves as a conference centre, an IT training centre, a café, a restaurant, a village hall and, indeed, as a polling station in the recent general election, which I say with particular affection because it was where I cast my own vote.

 

Of the 13 people who work at the centre, four are on zero-hours contracts and they earn holiday pay for every hour worked. These workers include some women over the age of 60 who are happy to have a few hours’ work here and there, and some sixth formers working for their A-levels who at certain times, when they are studying, want to be able to say no to any work at all, whereas at other times they will tell the centre that they would like as many hours as possible. Mrs King told me that it would be difficult to run the centre without the flexibility offered by zero-hours contracts, which she said were “flexible on both sides”.

 

Jim Shannon (Strangford) (DUP): Over the election period I had occasion to meet some people who were employed on zero-hours terms and their views were clear. The hon. Gentleman has given us a rosy picture of charities which use such contracts, but many people on zero-hours contracts are temporary agency workers who have no rights, as the hon. Gentleman said, and whose hours and pay are minimal. The companies employing them are successful and are making large profits. Is it not fair that those on minimal hour contracts should receive long-term contracts with better wages if the companies are making a large profit?

 

Mr Bacon: I agree that the picture is not all rosy. I started with the rosy news because I wanted to soften up my hon. Friend the Minister, but there are problems. That is why I applied for this debate. I will come on to some of those problems in a moment.

 

Mrs King told me:

 

“Just because it is not for everyone doesn’t mean it is wrong for everyone and that it is somehow toxic. Implemented legally and fairly, zero-hours contracts can be a brilliant way for small charities like ours to run more effectively.”

 

The whole issue of zero-hours contracts, as the hon. Gentleman said, featured in the general election campaign, particularly after the right hon. Member for Doncaster North (Edward Miliband), the former leader of the Labour party, said that the Labour party, if returned, would abolish zero-hours contracts, although the manifesto does not say that. It does not call for the complete abolition of zero-hours contracts. It says:

 

“Labour will ban exploitative zero-hours contracts.”

 

The hon. Member for Streatham (Mr Umunna), who was for a few minutes a candidate to succeed as leader of the Labour party, was quite explicit when he told the Labour party conference that Labour

 

“will act to outlaw zero hours contracts where they exploit people.”

 

Meanwhile, the Conservative manifesto promised to

 

“take further steps to eradicate abuses of workers, such as non-payment of the Minimum Wage, exclusivity in zero-hours contracts and exploitation of migrant workers.”

 

I am pleased that the new Government are now in a position to follow through on these commitments.

 

With reference to the comments from the hon. Member for Strangford (Jim Shannon), what struck me about the issue during the general election was how frequently voters mentioned it to me, unprompted, often while talking about their grown-up children entering the workforce, which suggests that it may be a bigger issue than the statistics suggest. In one election debate in a church, a member of the audience explained how his son travelled to Norwich each day to work in a retail outlet. When he got there at 9 o’clock in the morning he was told to go and sit in a store room at the back. Later in the morning, if it got busy, he would be called out on to the shop floor, for which he would be paid. He would then be ordered back to the store room to wait for his next slice of paid work later in the day.

 

I do not know anybody who would defend such arrangements. They are indefensible and, by the way, they are almost certainly illegal already, because the law states that “time workers” must be paid at least the national minimum wage when they are on standby at or near the place of work and are required to be available. I do not want to get this out of proportion. It is not a universal problem. Indeed, I met a young man earlier this week who was delighted with the flexibility that his zero-hours contract gives him, but who also said to me, “What you cannot do is take someone’s time and then not pay them for it.”

 

Sir Peter Bottomley (Worthing West) (Con): I hope my hon. Friend will agree that the minority of employers who have got into that habit should be exposed in public, should defend themselves in public and should be condemned in public.

 

Mr Bacon: I completely agree.

 

Hannah Bardell (Livingston) (SNP): I congratulate the hon. Gentleman on securing a debate on such an important issue. I think it would be fair to say that such employers are not in the minority. I agree with some of what he says, but not all of it. What assurances can he give to those on the Opposition Benches that members of his Front-Bench team will bring to an end exploitative zero-hours contracts and protect workers’ rights, as the SNP-led Scottish Government are doing through their Scottish business pledge and fair work convention?

 

Mr Bacon: Should the Prime Minister choose to appoint me to the Government, I will start to give such assurances. In the meantime, I look forward to hearing what assurances my hon. Friend the Minister will give.

 

I asked USDAW—the Union of Shop, Distributive and Allied Workers—to provide me with individual examples of exploitation. I was slightly surprised, but also pleased, when it told me that it had negotiated away zero-hours contracts in most of the places where its members worked. Its policy document states that “short-hours contracts” are in many ways an issue of bigger concern, but I am convinced that there is a problem. Actually, I believe that the problem is more extensive in the area of domiciliary care, where careworkers are often forced to rush from care appointment to care appointment without being given adequate time at each appointment, or time to travel between appointments, for which they are not paid.

 

A freedom of information request by the trade union Unison suggests that 93% of councils in England and Wales do not make it a contractual condition for the home care providers that they commission to pay their home careworkers for their travel time. That is despite its being the main reason why so many home careworkers receive pay below the national minimum wage. I believe that Her Majesty’s Revenue and Customs is investigating some home care firms, and I hope that they will be named and shamed.

 

After I spoke with Unison, it sent me the testimonies of several careworkers, some of them anonymised because the workers are simply too frightened to be open. One such home careworker wrote:

 

“I am on zero contract hours…If I kick off, I have the fear that they can turn around and take me off my calls…I work six days a week, which accounts to me putting in forty five hours plus…But I am lucky if I get paid for 28 of those hours”.

 

Another anonymous home careworker wrote:

 

“Until very recently I was working in home care, visiting vulnerable adults with a range of problems, such as dementia, MS, Parkinson’s, acquired brain injury, mental illness and the effects of stroke. Because I was providing a vital service to people with acute problems, I found the work highly rewarding. I really wish I could say the same about the pay and conditions of the job! Because no hours were guaranteed, there was no job security and I remember feeling nervous about complaining, in case my hours for the following week were cut. I was on little more than the minimum wage and out of this meagre sum I had to pay for my uniform and fuel”.

 

That is back to the worst management practices of the 1960s and 1970s.

 

Unison also sent me the testimony of a home careworker called Helen, who said this:

 

“I’m a home care worker and have been for most of my working life. I really don’t ever think about doing anything else. I love my job, I love the variety, I love the people I am lucky enough to work with. I don’t like the insecurity, I don’t like the debts, I don’t like the nights I lie awake wondering when will I ever be financially secure? I have seen many good workers leave, frustrated at the poor pay and the way zero-hours contracts are used by way of punishment and reward. If you turn down a shift, hours you were depending on can be taken and given to others, sometimes with only hours’ notice. I have seen how many use this as a way to simply force out staff who may have complained about quality of care. Is this acceptable? ‘Duty of Care’ means that we have to raise concerns, yet many are too scared of the implications financially if they do. Isn’t it time someone understood their Duty of Care to us? Isn’t it time those with the power to make a difference respected and valued care as much as I do?”

 

I want to say a brief word about housing schemes, not only because the Minister used to be the Minister for planning and knows of my interest in it, but because it is potentially directly relevant to the provision of home care.

It is an extraordinary fact that when planners look at housing schemes they are not required to consider the overall social impact. It is true that the key watchword is “sustainability”, but too often that means no more or less than what an expensive lawyer at a planning inquiry wants it to mean.

 

With regard to thinking holistically about the communities we want to see—and then designing and building places for people to live in, rather than large numbers of identical boxes—we are still in the dark ages. For example, if a mature couple with grown-up children and elderly parents visit a show home on a typical new-build development and asks how much sheltered accommodation is integrated into the scheme, where their elderly mum could come and live so that they and her grandchildren could see each other more often and more easily, they are treated almost as if they are mad. But if we were to design in such care provision when building new communities, we could do a much better job, with some permanent residential home careworkers built into the equation, without spending more money, and quite possibly spending less, while getting a better outcome. I believe that in the domiciliary care sector, there is still what amounts to systematic exploitation. I hope that the Government will look at the matter carefully.

 

The best case for zero-hours contracts is that they can provide an economical and low-risk way for employers to take a good look at new workers. From the employees’ point of view, they can be a way of getting into the world of work and showing what someone is capable of, leading on to better, more secure and better paid employment. The contracts can also provide invaluable flexibility for small organisations, including charities.

 

The best argument against zero-hours contracts is that they provide opportunities for unscrupulous employers who are determined to exploit people and who engage in practices that they would not wish to endure themselves, and that, in certain sectors such as domiciliary care, the problem amounts to systematic exploitation.

 

It can be true at one and the same time that zero-hours contracts can provide a useful and even invaluable tool to some organisations and industries and that they can be misused by companies determined to engage in systematic exploitation of vulnerable workers in certain sectors—domiciliary care, for example. In a Westminster Hall debate on home-care workers the year before last, the then Minister for Care, the right hon. Member for North Norfolk (Norman Lamb), stated:

 

“the idea of a zero-hours contract is, in most circumstances, completely incompatible with a model of high quality care, in which the individual really gets to know their care worker.”—[Official Report, 6 March 2013; Vol. 559, c. 262WH.]

 

This Minister needs to keep an eye on the issue. Zero-hours contracts are not going away. They have their place; they can even be invaluable. However, they are also a potential seedbed for gross exploitation.

 

I have five suggestions for the Minister. Will he undertake to keep a very close eye on the issue by establishing a small working group to keep him updated on issues around the use and misuse of zero-hours contracts? Secondly, will he undertake to work closely with the new Minister for Community and Social Care, my right hon. Friend the Member for North East Bedfordshire (Alistair Burt), an ideal appointment to that post, to ensure that firms providing care services are taking the required steps to stamp out bad practice and look after their employees? That could also ensure that the Government placed sustained pressure on such firms to do so.

 

Thirdly, will the Minister assist in establishing suitable whistleblower arrangements, or publicising existing whistleblower arrangements with trusted partners, so that vulnerable workers in areas such as the care sector feel confident about exposing malpractice? Will he work with HM Revenue and Customs, encouraging it to pursue cases where there are clear breaches of employment law—for example, the payment of the national minimum wage to care workers who are not paid for travelling between appointments—so that unscrupulous employers have a justified fear of ending up in the courts?

 

Will the Minister work with the excellent Minister for Housing and Planning—or encourage others to do so; this may be outwith his remit—to encourage more truly holistic housing schemes that provide long-term care solutions that are better for those in need of care, their relatives, careworkers and taxpayers, rather than engorging a small number of private sector providers who are diversifying because of the thinner pickings now available from PFI?

 

In our excellent Queen’s Speech today, we rightly heard about the Government’s determination to be a Government of one nation. “One nation” means that we look after taxpayers’ money and look very sceptically before allowing large private equity companies to hoover up cash that might well be better and more effectively spent directly by local community care co-operatives. “One nation” means that we encourage labour market flexibility but do not tolerate exploitation. “One nation” means that we look out for all our people. I look forward to the Minister’s reply.

 

The Minister for Skills (Nick Boles): It is a great honour to be speaking at the Dispatch Box on this, the first day of the new Parliament. I suspect that it will be the only time in my life when Her Majesty the Queen has the first word and I the last, although we can agree that her audience was somewhat larger and that she was a great deal better dressed.

 

I congratulate my hon. Friend the Member for South Norfolk (Mr Bacon) on securing this debate on an important subject that thankfully, now that the election has passed, we can shed real light on. We can discover the facts and pursue the examples of bad practice that he outlined. He is right to say that zero-hours contracts are in and of themselves nothing new and that a relatively small proportion of the workforce are on such contracts. He also rightly referred to a recent study by the Chartered Institute of Personnel and Development, which found that 60% of zero-hours workers were satisfied with their contracts and 65% of them were happier with their work-life balance because of those contracts. He described a number of situations involving individuals who actually welcomed these contracts because of the flexibility they gave them and the ability they provided to respond to other responsibilities, goals or ambitions that they had in their lives.

 

However, that should never be an excuse for complacency or for a belief that this is good for everyone and that every employer who makes use of these contracts is doing so responsibly. My hon. Friend gave a number of important examples of abuse. I hope he is pleased to know that one of my first decisions as Minister responsible for employment law was to implement the provision in an Act passed in the previous Parliament by my predecessor, my right hon. Friend the Member for West Suffolk (Matthew Hancock), that banned exclusivity clauses in zero-hours contracts. Exclusivity clauses did something simply outrageous. The point of a zero-hours contract is that it does not guarantee a specific number of hours of work in any period of time. To then require that the person makes themselves available constantly, waiting for a phone call, preventing them from going out and earning income from other work, is simply outrageous. It was happening, I am glad to say, with a relatively small number and small percentage of zero-hours contracts, but it was quite intolerable and we were right to ban it. I am very glad that we have implemented that ban. We will be making sure that that ban is not simply symbolic but is enforced.

 

I am happy to look at examples of other abuses. My hon. Friend described very eloquently the case of a young man—the son of one of his constituents—who was called into work, kept on standby and not paid. My hon. Friend speculated that this practice was already illegal. While I do not know the full details of the case, if it is as he described I can reassure him that he is absolutely right—it is already illegal. If his constituent would like to approach him, and he would like to pass on to me the specific details of that employer and that young man, I will be very happy to get HMRC and any other enforcement authority to come down like a ton of bricks on that kind of abuse. It is against the law, it is inhuman, and it must not go on.

 

My hon. Friend has asked for some further, very specific commitments. He is always cheerful and affable, but he never gives up as a Member of Parliament, as I know both to my cost and my pleasure in my previous role as planning Minister. If, in this Parliament, we see a revolution in the number of people who are able to secure a plot of land to build their own home, it will be very largely thanks to his doggedness on that issue. I have no doubt that he will continue to be as dogged on the issue raised in tonight’s debate.

 

On his first request, without absolutely committing to a working group—because I would want to know what its composition was—I can promise my hon. Friend that I will keep a very close eye on this. I assure him that I have already asked officials to look into other kinds of abuse of zero-hours contracts to explore whether there is something further that we can do to root out such exploitation of working people.

 

Sir Peter Bottomley: As a practical solution, would it be possible at some stage, not necessarily tonight, for the Minister’s Department, or for him, to say where people should email or telephone if they have a possible abuse to report, so that there is a central place to collect this information, not necessarily for action on every case but at least to gather it together?

 

Nick Boles: I thank my hon. Friend for raising that issue, which was the subject of the third request from my hon. Friend the Member for South Norfolk. I was going to say that I do not know what the whistleblower arrangements are, but I will undertake to find out tomorrow and make sure that they are better publicised to citizens advice bureaux and to relevant charities that can make sure that people are able to report abuse.

 

My hon. Friend’s second request, which will give me great pleasure to fulfil, is to work closely with the Minister for Community and Social Care, my right hon. Friend the Member for North East Bedfordshire (Alistair Burt). He is one of the most popular Members of Parliament and former Ministers, who I am delighted to say will now be on the Front Bench again. He is a deeply humane man, and I know that he will want to make sure that the people looking after the most vulnerable in our society are not exploited by their employers.

 

Jim Shannon: Will the Minister also look at firms that employ temporary agency staff and at their rights? Those I spoke to on the election trail told me that their rights have also been diminished.

 

Nick Boles: I am happy to look at that. If I may, I want to extend to the hon. Gentleman, as well as to hon. Members from all around the House, an invitation to bring me specific examples of bad practice—ideally with the identities of the employer, but if not, nevertheless with such examples—and I will try to find out what we can do about such practices if we have not already banned them, as was the case for the worker put on standby unpaid.

 

My hon. Friend the Member for South Norfolk asked me to get in touch with HMRC about the pursuit of breaches. He will be pleased to know that the previous Government, of which we formed a major part, introduced the idea of naming and shaming employers who breach national minimum wage laws. We will continue that, and I am very happy to direct officials to look specifically at breaches of national minimum wage laws in the care industry, where, as he has rightly highlighted and others have agreed with him, there is a problem.

 

On my hon. Friend’s fifth request, he is right that the whole question of the design of housing falls outside my ministerial portfolio. However, he knows that I share with him an absolute passion for the issue of housing—about how we must build more and better houses that work for modern families in all their shapes and sizes. I will continue to work with him as a private citizen and as a Member of this House to further that aim.

 

It has been a great pleasure to wind up this debate on the first day of Parliament. May I conclude by saying that today we have had a model of democracy and free speech? I know that all hon. Members from whatever party will be as dismayed as I was to learn that one of our number, the hon. Member for Clacton (Mr Carswell), was attacked outside by a group of, frankly, hoodlums simply because they disapprove of his views. I think that that is shameful. The hon. Gentleman is a man I like and respect. I think he is hugely misguided and that he is in the wrong party—I think he is beginning to realise that—but he has the right to express himself freely and openly, as we all do, and this House must defend the rights of hon. Members to do just that.

 


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