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Westminster Hall

Tuesday 9 July 2013

[Mr Peter Bone in the Chair]

Herbal Medicine (Regulation)

Motion made, and Question proposed, That the sitting be now adjourned.—(Mark Lancaster.)

9.30 am

David Tredinnick (Bosworth) (Con): I am extremely grateful to have the opportunity in this debate to raise the issue of herbal medicine with my hon. Friend the Minister. The issue has been on the agenda for many years, and I hope that by the end of the debate we can shed light on where we are going. I look forward to my hon. Friend’s remarks.

On Friday, I was at the Royal Society summer science exhibition. The Royal Society is our oldest and, some would say, most distinguished scientific society. Its fundamental purpose is to promote and support excellence in science and to encourage the development and use of science for the benefit of humanity. The Royal Society has played a part in some of the most fundamental, significant and life-changing discoveries in scientific history, and it continues to make outstanding contributions to science in many research areas. I will refer to what I saw at the exhibition and to what it has to say to us about herbal medicine generally.

If I may say in passing, Mr Speaker might like to visit the Royal Society because it has a wonderful gold mace that is the mirror image of the Mace that is carried into the Chamber. The mace was a present to the Royal Society from Charles II. Among the Royal Society’s former presidents are Sir Christopher Wren and Edmond Halley. The Royal Society has a wonderful line and body of knowledge, so I set great store by it. We must take note when the Royal Society seriously considers herbal medicine and related methods of delivery.

I was particularly struck by the Royal Society partnership grant project with Boroughbridge high school in Harrogate under the direction of Colin Inglis, the school’s biology tutor, and overseen by Professor Kerr, the consultant microbiologist at Harrogate and District NHS Foundation Trust. The project looked at several simple plants and herbs available in our gardens, from greengrocers and from garden centres to see what their impact could be on E. coli and other bugs—I will focus on E. coli. Working over not a very long period of time, the project found that E. coli growth is inhibited by the use of thyme, lavender and geranium set in essential oils. They said that they were able to identify the minimum inhibitory concentration of those oils derived from herbs and plants—the lowest concentration of essential oil that inhibits the growth of E. coli. When I discussed that with the directing staff, they said that the next step would be to determine the concentration that would kill E. coli—the minimum bactericidal concentration. That simple project in a school in Harrogate has huge ramifications, because it shows how easily-found common herbs and plants can be used in the furtherance of medicine.

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In the evening at the Royal Society there was a panel discussion on “Nature’s Marvellous Medicine,” and those addressing the audience were not ill-informed: Professor Dianna Bowles, emeritus professor in the department of biology at York university; Professor Roderick Flower, professor of biochemical pharmacology at the William Harvey research institute; and Professor Monique Simmonds, director of the Kew innovation unit, where she studies the chemistry of plants and fungi—of course, Kew Gardens is currently classifying all British herbs. They are not ill-informed people, and they were speaking about what could be done with herbs and plants.

The chief medical officer, Dame Sally Davies, recently said that resistance to antibiotics risks health “catastrophe” that would rank with terrorism and climate change. She said that Britain’s health system could slip back by 200 years unless the “catastrophic threat” of antibiotic resistance was successfully tackled. The Select Committee on Science and Technology, of which I am a member, might address that in this Parliament. Dame Sally Davies said:

“This is a growing problem, and if we don’t get it right, we will find ourselves in a health system not dissimilar from the early 19th century.”

Although hospital infections from bugs such as MRSA are greatly reduced, they are being replaced by infections with other bacteria. Antibiotic use is rising, not least in agriculture, and resistance is steadily growing in fish and farm animals—I remember raising the matter in this House 20 years ago or more—and there are problems with farmers, particularly in the third world, feeding antibiotics to chickens. I said then that such use could have catastrophic consequences, and now we know that, in some parts of the world, cattle have been fed antibiotics as a prophylactic, so it is no wonder that the new chief medical officer is focusing on that.

It is perhaps also significant that Professor Christopher Thomas, the professor of molecular genetics at the university of Birmingham, added to Dame Sally’s remarks:

“We need new ways to kill resistant bacteria or reduce their carriage of resistance genes. Novel approaches that might have appeared unrealistic a few years ago need to be explored.”

I suggest that one of those areas that needs to be explored is better use of herbs and plants in medicine. In a sense, and this is not an original phrase, we need to go back to the future to find those solutions. If I have anything further to say about Dame Sally’s release, it is that it does not provide any solution other than to suggest that we need to go for more antibiotics. The problem is that some doctors are saying that no antibiotics will work in 20 years’ time. The Government have a catastrophe management team—that is not the official title—and I think that issue should be added to its list.

Today, we are not specifically debating common plants that are available as foods or in the garden. Such plants are covered by different regulations. What we are debating is the future of herbal medicine in this country. If I may, I will set out the stall on what has happened in recent years. We have to go back to the House of Lords Science and Technology Committee report of 2000 that considered herbal medicine and other medicines that are not currently used in mainstream health care. The written evidence from the Department of Health stated:

“There is scope for the larger professions to follow the osteopaths and chiropractors in gaining statutory self-regulation, and this would undoubtedly serve their professions well.”

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I served in the Committee stages of the Osteopaths Act 1993 and the Chiropractors Act 1994, and the difference that statutory regulation has made to those professions in providing safe services for patients and giving assurance to doctors such as the Minister is extraordinary. They came in from the cold.

The Government then identified acupuncture and herbal medicine as specific therapies for which they wanted to achieve statutory regulation. I shall not dwell on acupuncture, as we must focus on herbal medicine. In her evidence to the Lords Science and Technology Committee inquiry, the then Under-Secretary of State for public health, the right hon. Member for Normanton, Pontefract and Castleford (Yvette Cooper) said:

“I think we would support their moves towards statutory regulation…We would strongly encourage them to continue the process towards proper self-regulation and statutory regulation as well…We do think that in the area of acupuncture and herbal medicine it is perhaps more important than in other areas.”

In its report, the Committee said:

“It is our opinion that acupuncture and herbal medicine are the two therapies which are at a stage where it would be of benefit to them and their patients if the practitioners strive for statutory regulation under the Health Act 1999,”

which is an enabling Act that, if I remember correctly, provides for different disciplines to come in via statutory instrument,

“and we recommend that they should do so.”

Regulation was recommended because those herbal professionals met the agreed criteria for statutory regulation that the Lords had come up with. There was a risk to the public through poor practice, and they had a voluntary regulation system and a credible evidence base. Regulation would ensure that appropriate training was established, resulting in competent practitioners with an understanding of the evidence base for their therapy along with an appreciation of the limitations of the treatments that they could provide. Safe practitioners would understand when to refer. Effective regulation would therefore seek to safeguard the public from incompetent practitioners and identify practitioners suitably qualified to use a range of potent herbal remedies not appropriate for over-the-counter sale. There are some powerful remedies.

The next stage in the saga is the European Union’s intervention. However, I want to make one point at the outset before we consider European directives. The proposal for statutory legislation pre-dates all the arguments about European directives, such as the traditional herbal medicinal products directive and others. The policy had broad cross-party support, and the distinguished Lords Committee, which included members such as Lord Walton of Detchant and Lord Baldwin, had proposed it. Distinguished men came up with that proposal. We were going down that route anyway.

Then the European Union became involved, with directives. We must address the directives, but we are not dealing only with them; we are dealing with a policy that was already in train. The objective of proper regulation had been there before the European Union directive 2001/83/EC, amended by directive 2004/24/EC, which said:

“A Member State may, in accordance with legislation in force and to fulfil special needs, exclude from the provisions of this Directive medicinal products supplied in response to a bona fide

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unsolicited order, formulated in accordance with the specifications of an authorised health-care professional”—

a key phrase—

“and for use by an individual patient under his direct personal responsibility”.

That meant that herbal practitioners would have to be classed as authorised health care practitioners in order to be able to continue using their herbal products.

In January 2002, the Department of Health, along with the Prince’s Foundation for Integrated Health and the European Herbal and Traditional Medicine Practitioners Association established the herbal medicine regulatory working group—HMRWG. The group and subsequent groups were chaired by Professor Mike Pitillo, a well-respected man whom I knew and who devoted many years of his life to the issue. His efforts were and are still appreciated by all who knew him; sadly, Mike died in February 2010. God bless him; he put so much into the issue on behalf of the community. The working group’s remit was to make recommendations on the regulation of herbal medicine practitioners and the reform of section 12(1) of the Medicines Act 1968. In 2003, the group published its report, “Recommendations on the Regulation of Herbal Practitioners in the UK”.

In effect, the group’s work on the issue of possible reforms to the regime of unlicensed herbal medicines supplied under section 12 represented the first stage in the exploration process envisaged by the Government. It needed to be seen as distinct from but complementary to the wider European negotiations on the then proposed directive on traditional herbal medicinal products, which related to industrially produced traditional herbal remedies sold over the counter directly to the public.

Working in parallel to the group was the acupuncture regulatory working group, which I need not discuss. The HMRWG concluded that the two professions should be regulated together, thereby addressing the high practitioner costs of running two separate registers. The Department of Health ran a consultation on regulation of the two professions, published in 2004 as “Regulation of Herbal Medicine and Acupuncture: Proposals for Statutory Regulation”. The results of the consultation were published in February 2005 as “Statutory Regulation of Herbal Medicine and Acupuncture: Report on the Consultation”.

The Medicines and Healthcare products Regulatory Agency ran a simultaneous consultation on section 12(1) reform—MLX 299, “Proposals for the Reform of the Regulation of Unlicensed Herbal Remedies in the United Kingdom Made Up to Meet the Needs of Individual Patients”—and published its results in January 2005. In 2005, if colleagues recall, we had a general election. There were delays at the Department, unsurprisingly, and pending developments in health care regulation as part of the Foster review stalled further work for nearly a year.

However, in early 2006, the Government set up the steering group on the regulation of acupuncture, herbal medicine and traditional Chinese medicine in order to consider how to proceed with the regulation of those professions. That involved yet another consultation process. On 12 June 2008, the steering group’s report was presented to the then Minister, the right hon. Member for Exeter (Mr Bradshaw). On 16 June, the steering group, chaired by the late Professor Pitillo, held a press conference at the King’s Fund to report on the document.

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All the reports and consultations found massively in favour of herbal medicines generally and statutory regulation in particular. After that tortuous process, they arrived at that conclusion.

Mr Philip Hollobone (Kettering) (Con): I am enjoying my hon. Friend’s speech immensely. No one else in the House knows as much about herbal medicine as he does. He speaks for the nation. In its survey, the MHRA found that as many as 3 million people had consulted a practitioner of Chinese herbal medicine, and as many as 25 million had bought herbal medicines over the counter during the previous two years of its survey.

David Tredinnick: I am grateful to my hon. Friend, who is ever supportive. He has tabled questions and acted for his constituents on this issue, as he always does. He is right. Three quarters of the population of the United Kingdom have used traditional Chinese medicine, herbal medicine, phytotherapy or one of the other disciplines sometimes classed as complementary. There is a huge swell of people out there who want such medicines. Going back to Dame Sally’s remarks, people are now frightened of using antibiotics; they are worried about overuse and that, when they really want them, they might not be effective. We have a crisis not only of effectiveness but of confidence. People who tend to go down the herbal medicine route have a lot of confidence, however, because they are dealing with nature and natural products that have been used over the years. Properly administered, those products do not have side effects and they are not prone to becoming ineffective.

Kate Hoey (Vauxhall) (Lab): I congratulate the hon. Gentleman, who is knowledgeable on the subject. Would it be helpful if he outlined what he feels might happen if the Government do not do what they said that they would do and what we all want to see happen on regulation?

David Tredinnick: I am grateful to the hon. Lady, with whom I discussed the debate earlier, and I will be coming on to the options available to the Minister. In fairness to him, I know that he has been focused on the matter, with his colleague in the Lords, the noble Earl Howe, a distinguished Minister. However, before I look at the solutions and some of the obstructions and problems—why we are not getting a solution—I will first go through where the Government are now.

On 16 February 2011, the then Secretary of State, my right hon. Friend the Member for South Cambridgeshire (Mr Lansley), made a written statement on the regulation of herbal medicine. Subject to parliamentary procedures, he aimed to have legislation in place by 2012—importantly, when the European law kicked in—and he stated:

“When the European Directive 2004/24/EC takes full effect in April 2011 it will no longer be legal for herbal practitioners in the UK to source unlicensed manufactured herbal medicines for their patients. This Government wish to ensure that the public can continue to have access to these products.

In order to achieve this, while at the same time complying with EU law, some form of statutory regulation will be necessary and I have therefore decided to ask the Health Professions Council”—

the strong regulatory body—

“to establish a statutory register for practitioners supplying unlicensed herbal medicines.”—[Official Report, 16 February 2011; Vol. 523, c. 84WS.]

Progress, however, has been slow.

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Before I get to the solutions, as prompted by the hon. Member for Vauxhall (Kate Hoey), let me emphasise that, although a Health Minister is responding to the debate, we should not be under any illusion that only the Department of Health is affected. If we do not got things right, we will see a large number of small businesses folding, because the whole supply chain of herbal medicine will collapse. That is extremely unsatisfactory.

Furthermore—I will not stray into this territory for long, Mr Bone, in case you are thinking of calling me to order—when the Science and Technology Committee went to Harwell to look at the European Space Agency, at its work on satellites and at what we are doing with the global positioning system in Europe, we looked at the Catapult centre, which is an organisation backed with hard cash by the Government to drive science forward. That is fine, and I asked them whether it was picking winners, but while I was listening in the state-of-the-art space centre, I was thinking, “But what about the small businesses we already have?” What will we do about the people who are providing a service to the community in health care? What will we do with them if their livelihoods are under threat?

Mr Hollobone: My hon. Friend’s excellent speech has come to the nub of what could be a huge crisis. If statutory regulation fails to go ahead, a wide range of herbal medicines supplied by practitioners to their patients will be lost. The directive has already stopped practitioners prescribing herbal medicines made by manufacturers and herbal suppliers for prescriptions to individual patients. Potentially, thousands of small and medium-sized herbal enterprises could go out of business.

David Tredinnick: My hon. Friend illustrates the point. The European directive on traditional herbal medicinal products now prevents third-party manufactured herbal medicines being prescribed to patients by practitioners, as well as individualised herbal medicines prescribed by practitioners and manufactured by a third party. One of the communities in the herbal medicine diaspora most affected is that of traditional Chinese medical practitioners. The directive has already had a negative impact on the availability of Chinese herbal medicine in the UK and Europe. The problem lies in the fact that the directive stipulated that, to prove traditional usage, there must be a 30-year history of usage, of which 15 years must be in the European Union. That can be difficult, because many Chinese medicines have been used for thousands of years in China—Chinese medicine goes back 3,000 years at least—but not in the European Union or the UK.

The directive was also conceived before we had the vast opening up of trade with China. Probably, no one envisaged what was going to happen. I will touch on that, because I was speaking to the Foreign Secretary about it last week. We now have a situation in which, once stocks of some Chinese medicines run out, it will not be possible to buy many of the formulations currently available.

Kate Hoey: Is this another example of the European Union interfering in all sorts of areas about which our own country should be able to make up its mind? Is this not another opportunity to say that we need to get some powers back from the European Union or leave it altogether?

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David Tredinnick: The hon. Lady is right. We all saw the headlines in the Sunday papers, and the coalition Government are intending to do just that. I hope that we can get some powers back. One of the solutions that I will propose—I know that you have an impartial role as Chair, Mr Bone, but I have heard mention of the European Union pass your lips in the past—may not even involve the European Union.

To finish with the Chinese problem, we are dealing with an international issue. We are trying to develop trade with China and have just opened a lot of trade missions there—the Department for Business, Innovation and Skills and the Foreign Secretary are backing such attempts—and we see it as a great area, but the Chinese are not happy about the idea that they have western medicine in their country, but we do not make full use of Chinese medicine over here. I have spoken to people about that. The idea that we will have a sweeping of the shelves of Chinese medicine will not play well in the international domain. We have had some controversial issues—the Government’s approach to the Dalai Lama was not overwhelmingly well received by some people in China, although many in this country support what has happened over there. If the Foreign Secretary has not yet been in touch with the Minister, he might well do so, because our international position with China is affected.

Recently, somehow, we have got to an impasse. I have had some helpful conversations, but there have been all sorts of suspicious signals and it is no secret that some practitioners have found it hard to get to the Department; some of the herbal medicine governing bodies have complained that they have not had easy access. Things do not feel quite normal, because the flow of information has not been what we might have expected. I have been told that the problem that stalled the process occurred in Poland.

In short, the European Court of Justice ruled that Poland was importing and selling unapproved drugs. It ruled against the Poles. Apparently, that has brought everything to a grinding halt in the UK. I sent the Minister a copy of the opinion that I received from the European Herbal and Traditional Medicine Practitioners Association, which was provided by David Reissner, a partner with Charles Russell lawyers and an acknowledged expert in pharmacy and health registration. There is no better person to give an opinion. In his letter he says:

“In my view the Poland case was primarily about whether financial considerations could be used as a justification for permitting the use of medicines that do not have a market authorisation. My conclusion is that the statutory regulation of herbal practitioners is still compatible with the ability by such practitioners to be authorised health-care professionals”—

that is a key phrase—

“who can order specials for individual patient use, relying on the exemption in Article 5.1 of EC Directive 2001/83.”

He continues:

“I also confirm that it is my opinion that statutory regulation is the only way to ensure that herbal practitioners are considered to be authorised health-care professionals within the meaning of Article 5.1 of the Directive.”

Mr Hollobone: To ensure that I understand, is my hon. Friend saying that Poland has effectively been caught out misusing the special needs provision in article 5.1, whereas the Department of Health proposed

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a perfectly legitimate scheme under the same article but has been put into a state of paralysis by the European Commission’s judgment?

David Tredinnick: That is pretty much right. The fact is that the Poles were trying to get round the system, were caught out and European law was applied effectively, but we are not in the same situation. I am sure the Minister has looked at the matter carefully, so will he please tell us his view? As far as I can see, there is absolutely no justification for using Poland and that view is widely held in the Community.

The key reason why the issue has got stuck has nothing to do with health care but is to do with the turf war and vested interests. I suspect that there are people in the medical establishment who do not want statutory regulation because they think it would interfere with the status of their own profession. When I talked to the Department for Business, Innovation and Skills about this, there seemed to be some confusion because it thinks that we might be going down a route of more regulation unnecessarily, but, sine qua non, there will be no herbal sector if we do not do something about it. Not doing something is not an option. We cannot just leave the matter as it is. I am pretty sure that vested interests in the medical establishment are trying to block this.

I said in the House recently that I had had a chance meeting with Lord Wilson of Tillyorn who was the last but one Governor of Hong Kong and introduced statutory regulation of herbal medicine there. I asked him what the objectives had been and whether he had problems with the medical establishment, and he said that he did. There are two issues: health care and vested interests. That is worrying because those vested interests may be very powerful. Returning to what Dame Sally, the chief medical officer, said and what I learned at the Royal Society last Friday, I ask those vested interests to back off because antibiotics are not working. We need to find something else and herbal medicine is one way forward. It has been suggested that there would be a legal challenge, presumably by people who are generally hostile to herbal medicine and increasingly misguided and misinformed. The Royal Society is the premier scientific body in this country, and the game is changing.

Mr Hollobone: Herbal medicine is extremely cost-effective and could help the country to tackle the ever-rising drugs bill in the national health service.

David Tredinnick: I have seen evidence in Europe that when doctors combine the two, the allopathic drugs bill can be reduced because herbs tend to be less expensive. That may worry manufacturers, and it has long been said that they are actively campaigning against this. They would be wise to accept that working with natural medicine is good for sales of conventional medicine.

Mr Peter Bone(in the Chair): Order. I apologise that I forgot to say at the beginning that I intend to start the wind-ups no later than 10.40, and that two Members have written to me asking to participate in the debate.

David Tredinnick: You are ever courteous, Mr Bone, and I will not detain the Chamber much longer. I am acutely aware of not taking up other people’s time.

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The Minister has three options. The Health Practitioners Council was the original idea. The Professional Standards Authority for Health and Social Care oversees the regulatory work of other organisations but is not as robust. A special licensing system for practitioner-prescribed products is a possibility, provided they are not traded between member states, and that may be a way out of the problem. We must find a solution, or there will be a disaster in the long term. I have used Chinese herbs and herbal medicine for many years, and I find them extremely safe and effective. I want people in this country to be able to use herbs. The key objective for the Minister is to ensure that the maximum number of products is available safely through regulated practitioners.

10.7 am

Jim Shannon (Strangford) (DUP): I congratulate the hon. Member for Bosworth (David Tredinnick) on bringing this matter to the Chamber for consideration. Many of us have herbal shops in our constituencies. We are aware of their good work, and that has been backed up in interventions today.

I have been contacted about the issue by a small local health food shop in the main town of my constituency, Newtownards, and by numerous patrons of that little shop who benefit from it. That is the point I want to make. The issue is clear: if EU interference continues, it will put businesses out of operation and people out of jobs, and it will result in more people searching the internet for remedies that may not be safe. That will not bring about any benefits. The EU lingers like a shadow over almost everything. Regulation is needed, but it is also necessary for common sense to prevail, and the balance may be difficult to achieve.

Mr Gregory Campbell (East Londonderry) (DUP): My hon. Friend has touched on the crucial point of the debate. Balance is needed to try to avoid people accessing unauthorised, unprofessional and perhaps harmful products, but to enable them to access products made by professional herbalists that they believe and evidence shows improves their condition. We must ensure that we get the balance right between the pursuit and prosecution of those who engage in bad practice and the promotion of those who engage in good practice.

Jim Shannon: My hon. Friend has gone to the crux of the debate in those few words. It is about getting a balance between allowing people to continue to use their herbal medicines and ensuring that they do not indulge in anything outside that.

I beg your indulgence, Mr Bone, because I would like to take this opportunity to highlight the save our supplements campaign, which has been well publicised. We should all be aware of the goals of that campaign and the ramifications for today’s topic of regulation. The issue that is causing concern in health shops is maximum permitted levels. It has been suggested to me that interference by Brussels—the shadow of Europe is almost like the grim reaper who hangs over everything that we do in the House—will set low doses for dietary supplements, so removing choice from consumers and adversely impacting on high streets.

Mr Hollobone: It would not be a Westminster Hall debate without a contribution from the hon. Gentleman, and I am enjoying it hugely. I am all for bashing

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Brussels and agree that there is no need for the EU to interfere with the issue, but the EU has given this country a way to address the matter through the establishment of a statutory register, which the present Government undertook to do by the end of 2012. Surely, there is complicity in the Department of Health, and we need the Department to explain why it has not fulfilled that undertaking.

Jim Shannon: I thank the hon. Gentleman for his valuable intervention, which gets to the crux of the matter and makes a point that I will come to later. We have an opportunity to address the issue, and I hope that the Minister can put the record straight when he responds.

Some high street health food shops are struggling to compete with internet retailers, which often offer a cheaper price, even though, more often than not, the product is inferior. Again, that uncertainty must be addressed. We have been made aware of the facts through previous speeches and interventions on the subject. For example, in a statement on the regulation of herbal medicine and traditional Chinese medicine, the Secretary of State said that he aimed

“to have the legislation in place in 2012.”—[Official Report, 16 February 2011; Vol. 523, c. 77WS.]

We are very aware of that and are wondering why it has not been done. Will the Minister indicate what is going to happen?

I have not been in Westminster long—I am one of the new intake from 2010—but I realised early on that things do not happen in a flash. However, “subject to parliamentary procedure”, should, in my opinion, not involve such a delay. I share the concern of my constituents and of Members present that the issue has been hijacked by EU regulations. In conjunction with the hon. Member for Bosworth, I reiterate that that was never the intention. Let us get the legislation working in Westminster and ensure that it delivers for our constituents.

The idea of the legislation is to ensure that people are licensed to sell and offer advice and that the trade is as safe as can be. On the issue that my hon. Friend the Member for East Londonderry (Mr Campbell) referred to, the girls in my office, who are always trying to get me, as an MP, to slow down and take better care of myself—that is what they tell me anyway—told me that they went to the local health food shop and were amazed at the wealth of knowledge that the lady who helped them had. She clearly was tremendously knowledgeable, and someone could spend the afternoon discussing what the best herbal medicine for them is. It turned out that that lady had a degree in herbal medicine and was able to suggest many different things.

There is a very real fear that should the legislation not go through and should our health food shops continue to suffer from our inaction, or from the Government’s inaction, such closures will mean that more people will order online with no face-to-face interaction or advice. They will not be told that they should not take certain supplements if they are on other medications, or that two supplements may counteract each other. The problem will not only mean fewer jobs on high streets, but potentially more pressure on our GPs in surgeries, as they try to figure out symptoms that may have been

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caused merely by people taking the wrong combination of supplements. In other words, the expertise and knowledge of people in herbal medicine shops is critical.

Not many of us question the benefits of supplements, especially in the busy lives that we lead, which often mean that we cannot eat as healthily as we would otherwise like. However, who here knew that taking the blood thinner warfarin with a multivitamin containing vitamin K would put people’s health in jeopardy? The lady in the health food shop did, and she was able to advise people who came to her about it. What happens when there is no local shop? Will GP calls be taken up with queries from, for example, people suffering from nausea, dizziness and so on, who find out, after extensive and expensive tests, that when they read in their magazine that vitamin E encourages glossy, thick hair, they had not realised that the aforementioned symptoms could be caused by too much vitamin E. That did not appeal to me, but if I had thought that vitamin E would have given me glossy black hair, or even roots, I would have bought it by the gallon. However, unfortunately, that was not the case. When people are buying supplements in health food shops, they ask what they are taking and are given advice. I hope that the point I am trying to make can be seen; it is very clear.

It is my belief that regulation by those who are knowledgeable is essential, and that should not be diluted by trying to ensure that the latest round of EU tick-box regulations are checked. The issue merits Government attention and a full debate process, and we are glad to have this opportunity in Westminster Hall. I again congratulate the hon. Member for Bosworth on securing this critical debate. I will support him in continuing to bring the issue to the Government’s attention to see action in terms of health and safety, as well as job security. I apologise, Mr Bone—I have guests in the Gallery that I have to take round the Chamber in a very short time, but like the character says in the film, “I’ll be back.”

10.14 am

Kate Hoey (Vauxhall) (Lab): It is a pleasure to follow the hon. Member for Strangford (Jim Shannon). I congratulate the hon. Member for Bosworth (David Tredinnick) on securing the debate, which is very timely, given that the House is about to rise for the summer recess, and we are seemingly still no nearer to getting what was promised some time ago—indeed, by the previous Government as well. It has been a long saga, as the hon. Gentleman outlined. I shall speak only briefly, because I want to give the Minister a long time to explain why we are in this position.

I start by reiterating my view that when people voted to join the common market back in 1975, they never would have dreamt that the EU would interfere in this kind of thing. However, it is absolutely crucial that if we are going to prevent the very well-established and effective herbal medicine products from disappearing, literally, from our shops and stop the consequent blow that that would mean for the retail sector, we need to get this regulation as quickly as possible.

I dislike regulation and want to see less of it. I believe that most people have common sense; they know what is good for them and want to do what they think is

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right. They do not need bureaucrats from the Department of Health telling them all the time what they should and should not be taking. We hear that all the time in so-called public health adverts, when most of what is said is either common sense or complete nonsense. I am a great believer in using not only herbal medicine, but natural products from our countryside. There are so many common-sense things that most of us grew up with—not necessarily only people brought up in the countryside but them in particular. If someone got stung by a nettle, they went immediately and looked for a docken leaf. We did all sorts of things naturally, and now, very few people seem to feel that that is what we should look to. I am afraid that vested interests are the reason for a lot of that. The pharmaceutical industry does not want to see it happening and would love to get rid of all health food shops.

Mr Gregory Campbell: Does the hon. Lady agree that as well as the vested interests that she alludes to, at times, in the medical establishment, there is almost a form of elitism that denigrates herbal medicine, suggesting that it only has a placebo effect and is not practically of benefit to people, even though many testify that it is?

Kate Hoey: The hon. Gentleman puts it very well. That is what happens, not only in the pharmaceutical industry, but with doctors, who have a very narrow view of what health is, in my opinion. That makes it all the more important that we ensure that alternative medicines are available. It is great that we have an heir to the throne who believes that some of this is really important. I wish that the Department would listen to His Royal Highness Prince Charles, because some of what he says on the matter is absolutely right.

The other issue that I want to raise is about the Health and Care Professions Council, which I think the Minister has overall responsibility for. It is based in my constituency and does a brilliant job. However, recently, it seems as though the Department’s general view on what it does and how it works has changed. We have been trying to get sports therapists registered for a very long time. Everyone agrees that that should happen. The HCPC, which is meant to be the body that gives advice, has gone and said, “This must be registered. We must do this.” Sport England wants it to happen, as does anybody involved in sport; yet somewhere in the Department, there is a block. I actually do not think that it is Ministers; I think that it is officials. Officials do not care who is in government; they do what they want to do; and they will continue to pull a line. It seems as though the Minister or the new Secretary of State could be dangerously close to heeding advice from officials to drop the whole thing. I worry very much about that.

David Tredinnick: When I was working on my speech for today, I looked at the lists of those who are regulated by the Professional Standards Authority for Health and Social Care and the Health and Care Professions Council and I could not for the life of me work out why some were on one list and some on the other. There is another debate to be had on that issue.

Kate Hoey: I hope that the Minister will give us some clarification on that.

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Many campaign groups, including Consumers for Health Choice, are very clear that they want the Secretary of State and the other Ministers to ignore the siren call from officials and fulfil their promises. This is very simple. When the register was announced back in February 2011, it was warmly welcomed by virtually everyone. Consumers were pleased that the register allowed an exception for herbal practitioners from the traditional herbal medicinal products directive—an EU law that became fully applicable in April 2011 and would have meant the banning of all unregistered herbal medicinal products. People will remember the campaign that was held across the country. All MPs got many letters of protest from constituents and from herbal shops and health shops. At the time, the position was that virtually all herbal medicinal products would have been banned. A register would have allowed practitioners to access unlicensed products, thus preserving choice in relation to safe and effective products for thousands of consumers. We all want people to be safe, but that has to be within the broad band of common sense and experience, not because a particular official decides that they do not like a product.

The industry was very pleased. Obviously, the practitioners were delighted that they could still use products that they had used for many years and would not see their consumers drift away, disappointed by a restriction stopping them buying things. All the manufacturers and retailers were pleased for the same reason. It was a win-win situation, so where is the register? The reality is that, because campaigners were reassured by the Government’s words—perhaps people should have been more cynical about the promises of a Government of any sort; that is why there is such a disconnect between the public and politicians—we relaxed the pressure to introduce the register. Of course, the Government got distracted by the huge and messy Health and Social Care Bill and we lost the then Secretary of State. That is where we are now.

I am very concerned and I want to hear the Minister give us an assurance today that this proposal has not been dropped, that the officials are not getting their way and that the register will be introduced as quickly as possible, so that everyone can exercise choice about what they use—choice about their health and how they treat their body—in a way that is not dominated by directives from the European Union.

10.22 am

Mr Philip Hollobone (Kettering) (Con): Natures abhors a vacuum, Mr Bone; it looks as though it falls to me to fill it, albeit briefly. I apologise that I cannot stay for the end of the debate, but I have been encouraged to speak by the excellent contributions that we have had so far, led nobly by my hon. Friend the Member for Bosworth (David Tredinnick), who has an unparalleled reputation for knowledge in this area. I am sure that we all commend him for that.

There is no reason at all why the European Union should interfere in this issue. Why should not the United Kingdom be able to decide for itself whether it wants to regulate herbal medicines? This is another area in which the European Union is unnecessarily interfering in our daily lives and, of course, affecting millions of people. We have already heard that more than 3 million people access Chinese herbal medicine in any two-year period

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and that 25 million of our citizens buy herbal products over the counter in any two years, so this is a matter of huge interest.

The problem is quite technical, but I think that we could easily overcome it, as indeed the Government said that they would. The European Union has given this country a way around the European Union regulations, and the Government took up the challenge. In February 2011, two months before European directive 2004/24/EC took effect, the then Secretary of State for Health said:

“This Government wish to ensure that the public can continue to have access”

to unlicensed manufactured herbal medicines. That was the clear will of Her Majesty’s Government. The Secretary of State continued:

“In order to achieve this, while at the same time complying with EU law, some form of statutory regulation will be necessary and I have therefore decided to ask the Health Professions Council to establish a statutory register for practitioners supplying unlicensed herbal medicines.”—[Official Report, 16 February 2011; Vol. 523, c. 84WS.]

As the hon. Member for Vauxhall (Kate Hoey) said, millions of people throughout the country—practitioners and users—took great comfort from those words and the clarity of direction laid out by Her Majesty’s Government.

Sadly, although the Government promised that the register would be introduced by the end of 2012, we are now well into 2013 and there is no sign of it. Presumably, the Secretary of State made his clear statement on the advice of officials in his Department. If it is the officials who are now telling the Government that they cannot have the statutory register, we need to hear from the Minister today that that is the case and the reasons for that about-turn, because millions of people in this country, including many of our constituents, took great comfort from those words in 2011.

As my hon. Friend the Member for Bosworth said, it appears that the Department has been thrown into a state of paralysis by the judgment on Poland. Poland was clearly caught out trying to break the rules and, under EU regulations, the Commission took Poland to the Luxembourg Court, which duly found against Poland. The Polish case is not a parallel to the United Kingdom situation. It may be a judgment on the same part of the EU legislation, but Poland was trying to abuse article 5.1; the United Kingdom Government said that they wanted to comply with article 5.1, by coming up with the statutory register. If Her Majesty’s Government believe that that judgment on Poland is the cause of their paralysis, the Minister needs to say so today and explain why that judgment is holding up the United Kingdom setting up a statutory register.

An EU directive has come in; that was in April 2011. The Government said that they would have a statutory register by the end of 2012, to ameliorate the worst effects of the directive, yet more than two years on, the herbal medicine industry, which Her Majesty’s Government said that they wanted to protect, remains exposed to that EU directive. That is simply an unacceptable situation. There will be, in all our constituencies, small and medium-sized herbal practitioners that are finding their livelihoods affected by an EU directive that the Government promised they would ameliorate—two years on, they have failed to do so. The Minister needs to explain to the House today why we are in this sorry state and what he will do to sort it out as quickly as possible.

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10.28 am

Andrew Gwynne (Denton and Reddish) (Lab): It is a pleasure to see you in the Chair, Mr Bone. I congratulate the hon. Member for Bosworth (David Tredinnick) on securing the debate. As someone who, over the past few days, has been suffering with quite bad hayfever, I would quite like a remedy, herbal or otherwise, for my suffering. I am pleased that we have had a chance in today’s debate to discuss some very important issues in relation to the regulation of herbal medicine. I know from the hon. Gentleman’s previous contributions in the House that he takes a very keen interest in and is a committed supporter of various forms of alternative medicine, including homeopathy and herbal medicine. He continues to raise these issues passionately in the House, most recently in the estimates day debate last week. I also congratulate the hon. Members for Strangford (Jim Shannon) and for Kettering (Mr Hollobone) and my hon. Friend the Member for Vauxhall (Kate Hoey) on echoing the many issues and problems. There are issues with the provision of non-manufactured herbal medicine due to the absence of regulation of herbal regulation practitioners. There have admittedly been delays in making progress on the regulations, which all relevant parties agree with, and all sides agree that the unexplained delays are frankly unacceptable. I will return to that later in my contribution.

As we know, the MHRA is responsible for medicines. It explains the licensing of manufactured herbal medicines as follows:

“The new European Traditional Herbal Medicinal Products Directive…came into effect on 30 April 2011. The Directive establishes a regulatory approval process for herbal medicines in the European Union...It requires each EU Member State to set up a traditional herbal registration scheme for manufactured traditional herbal medicines that are suitable for use without medical supervision. Companies are no longer able to sell manufactured unlicensed herbal medicines unless they have an appropriate product licence”.

The supply of non-manufactured medicines is permitted, but there remains a long-standing concern with the non-regulation of herbal medicine practitioners. Currently, anyone can set up as a practitioner. The guidance states:

“Regulation 3 of The Human Medicines Regulations 2012 (formally Section 12(1) of the Medicines Act 1968) is commonly referred to as the ‘herbalist exemption’ and permits unlicensed remedies to be made up and supplied by a practitioner to meet the needs of an individual patient following a one-to-one consultation. The existence of this regime is greatly valued by herbal practitioners and by many members of the public. However, there are widely acknowledged weaknesses in the public health protection given by the regime. Regulation 3 remedies are not subject to a regime of specific safety or quality requirements. There are no restrictions in terms of those who operate under the regime. Anyone—irrespective of qualifications or experience—can practise herbal medicine and, after making a diagnosis and forming a judgment about the treatment required, can make up and supply an unlicensed herbal medicine.”

As we heard in the debate, there was a great deal of discussion about regulation under the previous Government. They supported moves towards statutory regulation of herbal medicine practitioners, which was the subject of consultation in 2004. The consultation report stated:

“The majority of the responses indicated strong support for the introduction of statutory regulation, in order to ensure patient and public protection and enhance the status of the herbal medicine and acupuncture professions.”—

That point is important in its own right. In 2008, a report to Ministers from the Department of Health steering group on the statutory regulation of practitioners

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of acupuncture, herbal medicine, traditional Chinese medicine and other traditional medicine systems practised in the UK concluded:

“The Steering Group is strongly of the view that the decision to statutorily regulate professions practising herbal medicine and acupuncture is in the public interest.”

It also urged that there be no Government delay in introducing regulation, saying:

“The Steering Group is of the view that there is an urgent need to proceed without delay with the statutory regulation of practitioners of acupuncture, herbal medicine, traditional Chinese medicine and other traditional medicine systems. The Department of Health has been working with practitioners from these sectors, in some cases for over a decade, and a timeframe has been published that has not been adhered to.”

On 3 August 2009, the four Health Departments of the UK published a consultation paper on statutory regulation of practitioners of acupuncture, herbal medicine, traditional Chinese medicine and other traditional medicine systems practised in the UK. A clear majority of responses—85%—were in favour of statutory regulation, but, as we have heard, there has been little progress, despite the then Secretary of State for Health, the right hon. Member for South Cambridgeshire (Mr Lansley), pledging on 16 February 2011 to regulate herbal medicine practitioners, as the hon. Member for Bosworth pointed out. The Health and Care Professions Council was asked to establish a statutory register for practitioners supplying unlicensed herbal medicines, but there has been no further progress. When does the Minister expect that he will establish a statutory register for practitioners supplying unlicensed herbal medicines? The National Institute of Medical Herbalists is rightly critical of the lack of progress:

“In February 2011, the Secretary of State for Health announced that UK herbalists were to be statutorily regulated. He pledged that, subject to the usual procedures, the Department of Health (DH) would have this ready by 2012. Statutory Regulation (SR) is urgently needed to protect the public from untrained herbalists and also to allow trained herbalists to continue to practice within the constraints of EU Directives. Regulation will be via the Health and Care Professions Council (HCPC) which regulates dentists, dieticians and physiotherapists. Two years later the DH has failed to publish the draft legislation and there is no sign of progress. The fear is that with many other priorities the DH will let the issue drop. Failure to implement SR for herbal medicine practitioners is disastrous…In short, statutory regulation is clearly in the public interest!”

A recent MHRA survey showed that about a quarter of the population use over-the-counter herbal medicines. If that continues, as I suspect it will, surely the Government have a responsibility to ensure that arrangements are in place to make certain that such medicines are safe, as far as they can be, and that those who prescribe and dispense such medicines are appropriately qualified and regulated. It is therefore important that we get a clear view from the Government today on whether they will continue with the statutory registration proposals. It is also important that they give us some confidence that it will be done within a reasonable time frame, so that we can give that confidence back to the industry and those who use herbal medicines.

I commend the hon. Member for Bosworth for his persistence in this matter and for securing the debate today. I look forward to the Minister’s assurances that the Government still take regulation seriously—I hope— and are looking for practical ways to ensure that it can proceed swiftly.

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10.38 am

The Parliamentary Under-Secretary of State for Health (Dr Daniel Poulter): It is a pleasure to serve under your chairmanship, Mr Bone, for, I believe, the first time. I am sure that you were salivating, listening to the issues raised in the debate—

Mr Peter Bone (in the Chair): Order. I want to make it clear to the Minister that when I sit in this Chair, I have no views on anything.

Dr Poulter: Indeed, Mr Bone, as you say, you have no views on anything when you are impartially chairing the debate, but I am sure you pay keen interest to the topics raised, in your position as Chair and otherwise.

I pay tribute to my hon. Friend the Member for Bosworth (David Tredinnick) for securing the debate, which I am sure is of interest to the consumers and practitioners who use herbal medicines, as well as to the many Members who attended the debate today. None of us disagree with the principles articulated here—we can all sign up to them—but good government is about working through the practicalities of proposals to ensure that they become good laws, as I will discuss later.

There have been many good and worthy contributions to the debate. The hon. Member for Strangford (Jim Shannon) showed his strong support for herbal practitioners in his constituency, and he was right to say that things in Government do not happen in a flash but have to be properly thought through. I want to reassure him that some of the products he mentioned—he talked about the benefits of vitamin E, for example—are freely available from herbal practitioners, and indeed from pharmacists and other places.

There were other strong contributions from my hon. Friend the Member for Kettering (Mr Hollobone), who is no longer in his seat, and the hon. Member for Vauxhall (Kate Hoey). The hon. Lady made her case eloquently, and I would be happy to meet with her at a later date to discuss sports therapists further, but I would not wish to intrude on Mr Bone’s patience by talking about the issue today and I hope she will forgive me for that.

I pay particular tribute to my hon. Friend the Member for Bosworth for his principled and long-standing support for herbal practitioners and his interest in alternative therapies, homeopathy and many other such issues. Today he has demonstrated his extensive knowledge of the topic under debate, and of alternative therapies in general. I am sure I am right in saying that he is the most informed Member of Parliament on many of these issues, and it is a great tribute to him that he has secured the debate today. I am sure that herbal practitioners and alternative therapists would wish to pay tribute to his great work and his advocacy on their behalf, and on behalf of his constituents.

My hon. Friend is right to highlight the chief medical officer’s challenge about the future of antibiotics, but we can make a clear distinction between those remarks and the subject of today’s debate. I am sure that the chief medical officer would not wish her remarks to be associated with a call for a greater use of herbal medicine—that was clearly not outlined in her paper. Although it is important that we always consider ways—via traditional medical routes or otherwise—of improving people’s

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health and providing the right therapies, the paper clearly laid out the long-standing challenges as being about antibiotic resistance, and it would be wrong, therefore, to allow the two issues to be confused.

By way of background, it is worth highlighting that although we support patient choice some herbal products have caused harm to consumers. There are a number of reasons why that might happen: the herb may be intrinsically toxic; the product may be accidentally or purposefully contaminated by harmful materials or heavy metals; people may choose herbal products for serious conditions when medicines with a solid evidence base would be more appropriate; and, if herbal products are taken together with conventional medicines, the interactions may be unpredictable. It is right, therefore, that we support the responsible use of medicines and have a licensing system.

Directive 2004/24/EC on traditional herbal medicinal products was introduced to harmonise the European Union internal market and remove barriers to free movement. The directive deals with products manufactured on an industrial scale, and makes all operators in the market comply with the same set of rules, facilitates free movement and ensures increased product safety, which, I am sure we agree, has a positive impact on patient safety and public health.

The question of whether herbalists and traditional Chinese medical practitioners should be statutorily regulated has been debated since the House of Lords Science and Technology Committee first reported on the matter in 2000. The hon. Member for Vauxhall and my hon. Friend the Member for Bosworth outlined in their remarks that there is a lot of background and history. The previous Government grappled with the issues, and the current Government are also considering how to address and fulfil the commitments made by the previous Health Secretary, my right hon. Friend the Member for South Cambridgeshire (Mr Lansley). Hon. Members will be aware that on 16 February 2011 the Government announced their intention to take forward the regulation of herbal medicine practitioners and traditional Chinese medicine practitioners, specifically with regard to the use of third-party products in their practice.

Herbal products broadly fall into three categories. The first are the 310 herbal medicines that already have a marketing authorisation or a traditional herbal registration—in other words, a product licence. Those 310 medications are currently available for use and are effectively licensed. They are safe and widely used, and have undergone all relevant testing and checks. The second category, which is the one we are addressing today, covers products manufactured by a third party. Such products have been illegal since April 2011, following the implementation of the EU directive. The third category is products made up by a practitioner on their own premises following an individual consultation. Although such products are not affected by the directive, some of the herbal ingredients may be restricted by the Human Medicines Regulations 2012.

The previous Health Secretary’s concerns about the second category—products manufactured by a third party—prompted the decision to take forward statutory regulation of such products. The Government’s intention was to allow regulated herbal practitioners lawfully to source third-party manufactured herbal medicines, with appropriate safeguards in place to minimise the risks

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associated with the products, but since April 2011 the European directive has made it illegal for herbal practitioners in the UK to source such products for their patients.

Following the EU judgment in the case of the Commission v. Poland, which my hon. Friend the Member for Kettering mentioned, we have reassessed the risks. That case actually concerned unlicensed conventional medicines being used because they were cheaper, and although there is a clear distinction between those products and herbal remedies we had to look at what else the judgment said. It looked at the specials regime and, critically, it emphasised how strictly the regime must be applied. The judgment has a knock-on effect for what we propose for the use of herbal medicines manufactured by third parties without a licence, and it therefore needs careful consideration because there is a very high risk that we would be found to be in infraction of the European directive. We therefore need to consider further herbal products manufactured by a third party, and I will return to that point later.

The Government would, of course, like to find a way through the issue that supports responsible businesses and ensures public safety. Since the announcement in February 2011, the Department of Health has been working with officials in the devolved Administrations and with the Health and Care Professions Council to establish a statutory register for herbal practitioners. Alongside that, we have been considering a strengthened system for regulating medicinal products, to enable consumers to have access to a greater range of third-party manufactured herbal medicines. The process continues to be complex and lengthy, and it has been further complicated by the judgment in the European Union v. Poland case.

We acknowledge that there is strong support from some groups of herbal practitioners for the statutory regulation of the sector, but not all practitioners are in favour. I am sure, therefore, that hon. Members will appreciate that it would be irresponsible for the Government to undertake to alter the status of a group of workers without first ensuring that the policy and final decision offered an appropriate form of regulation and ensured that the proposals adequately addressed the risks posed to consumers of third-party manufactured herbal medicines.

As I stated earlier, complex issues are involved. We are discussing how to ensure that our proposals are fit for purpose and proportionate, and that they properly protect the public. I want to assure the hon. Member for Vauxhall that the matter has not been dropped. We absolutely support the principles outlined by my right hon. Friend the Member for South Cambridgeshire in his written ministerial statement to the House, and I fully appreciate that the delay is causing anxiety and concern to practitioners of herbal medicine and to consumers.

To ensure that we take forward the matter effectively, we want to bring together experts and interested parties from all sides of the debate to form a working group that will gather evidence and consider all the viable options in more detail, particularly because of the Polish case. I am aware of the concerns of my hon. Friend the Member for Bosworth about making timely progress, and I would therefore very much welcome his

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direct involvement in the working group to ensure that the interests of practitioners are properly looked after. We can meet when the House returns to work out how to take forward the proposal.

I hope that my commitment to setting up a working group will reassure my hon. Friend and all hon. Members that the Government are carefully considering this important issue. We recognise and agree with the principles, but the practicalities are such that we must have legislation that is fit for purpose—that does not trigger infraction proceedings from the European Union, but protects the public. That is vital in all health care matters, whether in relation to traditional medicines or to herbal medicines and alternative therapies. For that reason, we want to set up a working group and to work with my hon. Friend, and herbalists and others, to ensure that the legislation is fit for purpose. I look forward to discussing that with him in due course.

David Tredinnick: Before my hon. Friend sits down—I think that he was about to do so—may I thank him for his remarks? I am sure that knowing there is some progress is welcome, but I remind him that there have been many working groups in different guises over a long period, and the image that springs to mind is of the long grass. I am grateful to him for suggesting that I might be part of the process, but I want to be reassured that we are in the short grass. Lastly, is there general agreement with the devolved Administrations or is that a sticking point?

Dr Poulter: I reassure my hon. Friend that I am not aware of any points of disagreement with the devolved Administrations, but I will write to him and provide reassurance if there are any issues of which I am unaware. My understanding is that there is a unified position across all of the different health Departments.

Jim Shannon: On the devolved Administrations, I speak with some knowledge of the Northern Ireland Assembly, where my colleague Edwin Poots is the Minister of the Department of Health, Social Services and Public Safety. We and the Minister in the Northern Ireland Assembly are keen to have a focus of attention and a continuity of thought among all the regions of the United Kingdom to ensure that we can support the Under-Secretary of State for Health. The quicker he and the Government move that on, the gladder the regions—especially Northern Ireland—will be to jump in behind and support them.

Dr Poulter: The hon. Gentleman is absolutely right to highlight the strong working relationships, particularly with his colleague in Northern Ireland. We are grateful for that continuing strong working relationship on both this and other issues, and I look forward to working with him.

I reassure my hon. Friend the Member for Bosworth, who was concerned about the short and the long grass, that the intention behind his involvement in the working party is to keep it firm to its task. I am sure that he will want, as part of his involvement, to ensure that that happens. When we meet to discuss this further after the House returns in September, we can ensure that the proposals are proportionate and fit for purpose, and

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that they protect the public, including through giving people an informed choice about the use of herbal products.

Kate Hoey: Will the Minister give way?

Dr Poulter: I will give way for the last time.

Kate Hoey: I tend to agree about the long grass: officials are always coming up with another working party, because it is a nice way to postpone things. Will the Minister give us some idea of the time scale?

Dr Poulter: We need to sit down together. I very much want to involve my hon. Friend the Member for Bosworth, and the hon. Lady would be very welcome to join that discussion when the House returns. The idea is to get a working party up and running in the early autumn to ensure that we progress matters. We obviously need to discuss issues raised today about statutory regulation and third-party manufactured products, and to look at such products in detail to see which might be classified as more akin to food additives or vitamin and mineral supplements and which as more akin to medications, because there is a spectrum. We need to work through such issues to make sure that we get to the right place.

It is important that any legislation not only passes the test of principle—we are all signed up to it—but is practical and fit for purpose. Particularly in light of the judgment in the case of the EU Commission v. Poland, we have other issues to consider that make the matter a little more complex. I reassure my hon. Friend the Member for Bosworth and the hon. Member for Vauxhall that we are committed to making timely progress, and when we meet on our return in September, we can progress things. I am sure that my hon. Friend’s involvement will keep the Government keen to their task.

Mr Peter Bone (in the Chair): I thank hon. Members for taking the time for an absolutely splendid debate.

10.56 am

Sitting suspended.

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Gift Cards

11 am

Penny Mordaunt (Portsmouth North) (Con): It is always a pleasure, Mr Bone, to see you in the Chair. I know that many in the House are exercised by the stories we have heard in the wake of companies going into administration of people not being able to cash in their gift vouchers or losing their savings in schemes such as Farepak. It is terribly unjust and it is time that we did something about it.

My experience with Portsmouth FC has taught me that the victims of a company’s administration are not always obvious. In that case, rules that were not widely known meant that football creditors were at the head of the queue for repayment, despite the fact that the credit of others had been just as vital to the running of the club. Those at the head of these queues might receive only a tiny fraction of their investment, and those at the back nothing at all. It is devastating to be told that, through the mismanagement of others, one will not receive back a penny of one’s loan. How much worse is it to be told that money one has paid over, not as a loan but in exchange for goods, will be taken without redress?

Jessica Morden (Newport East) (Lab): The hon. Lady is quite right to highlight the issue of unsecured creditors losing money when companies go under. As she said, the situation is reminiscent of what happened with Farepak, when thousands of people lost their Christmas savings. It is only now, seven years later, that we have come to a very unsatisfactory conclusion. Does she agree that we should redouble our efforts, because what might seem like quite small amounts of money to some people are very significant to those whom she mentions?

Penny Mordaunt: I am grateful to the hon. Lady for her intervention. She is absolutely right to say that this matter disproportionately affects those people on the lowest incomes. As she rightly said, the Farepak incident, which happened before I was elected to this House, has been going on for a number of years, so it is really time that the Government acted to stop such poor practice continuing.

Charlie Elphicke (Dover) (Con): I congratulate my hon. Friend on securing this important debate. Is she aware that the matter affects failing retailers as well? A YouGov poll in March 2013 found that 86% of people believed that gift cards should be regulated to protect consumers against failing retailers? Does that not show the importance of taking action as soon as possible?

Penny Mordaunt: I agree with my hon. Friend and I am grateful to him for his expertise. As I share a corridor with him in Parliament, I know that he is a champion of consumers in Dover and Deal and I am grateful to him for his support on this issue.

It is a terribly unjust position in which the holders of gift cards find themselves when the shop that issued the card goes into administration. Such people should not be treated as ordinary creditors. A grandmother who buys her grandchildren the once-ubiquitous WHSmith voucher for Christmas does not regard herself as having lent Smith’s any money. On the contrary, she has made a purchase. Indeed, her circumstances are just the

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opposite of a creditor’s, who might expect to receive some interest on his loan, as her gift card is worth less and less as time passes, due to the effects of inflation. It is as illogical to deny gift card holders the right to redeem their vouchers as it would be to demand that people who had bought their goods return them to the shop to help pay off the creditors. It is from that essential point that we must proceed today. A gift card is not a bond certificate; the money has not been loaned to the company. Quite simply, the collection of the product has been deferred, which is, in any case, to the advantage of the company. That principle has already been recognised at an EU level in respect of e-money, which is money put on to pre-paid cards or gift cards bought through third parties. Those moneys must be kept in segregated accounts pending the use of the cards, so that the consumer is protected.

In Britain, that scheme is regulated by the Financial Conduct Authority, a successor to the Financial Services Authority. Individual retailers may opt in to the scheme, but, for perhaps obvious reasons, the temptation seems to have been uniformly resisted. Although there is no mandatory and regulated scheme for cards issued by companies independently for use in their own shops, there appears to be no impediment to its introduction. Already many retailers that issue their own unregulated cards accept the regulated cards issued by third parties, such as the One4all card, including Argos, Boots, B&Q, Currys, Debenhams, Topshop and the aforementioned WHSmith. In all, the Gift Voucher Shop, which is responsible for the One4all card, has more than 1,500 corporate clients. Surely that is a double standard that should not be allowed to continue. Two customers who intend to spend their vouchers at the same shop could thus be in the absurd situation that one can have a full refund and the other receives nothing. The matter is left entirely to the discretion of the administrator.

It is true that under the Consumer Credit Act 2006, those who bought vouchers with credit cards are protected, but only if they bought between £100 and £30,000 of vouchers. The problem here is twofold: people who buy vouchers as savings, perhaps against the expense of Christmas, are very unlikely to use credit cards; and those who buy vouchers as gifts to put towards say the purchase of white goods on a wedding list are unlikely to do so to the sum of £100. Chargeback offers some protection to consumers using certain debit cards, such as Visa, American Express and MasterCard. In all circumstances, there is a 120-day window in which to make a claim for a refund, and the claim must be made by the purchaser, not the holder of the voucher. Once again, that is contingent on a given card supplier operating the scheme, and, in all circumstances, those who bought vouchers with cash, which is a likely scenario when smaller sums are involved and if the people buying them are paid in cash, are entirely exposed.

What is hard to understand is why the administrator is allowed to appropriate the money held against vouchers for the purposes of winding up the business. As I said earlier, that is akin to telling anyone who has previously bought something from that shop to return it without a refund, or the practices of the most artless playground bully.

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Some administrators are prepared to accept vouchers, such as those for Nicole Farhi and Blockbuster. Holders of Republic vouchers were not so fortunate, which meant that the administrator simply took £1.2 million in advance payments. That is £1.2 million with just one retailer. The evidence of total sales suggests that there is still a demand for gift vouchers. Last year, more than £4 billion was spent on their purchase and, as they are not exchangeable for cash, one can only assume that retailers like them, too. How many of the people who contributed to that £4 billion knew that they, or the vouchers’ intended recipients, were so vulnerable?

Currently, holders of gift cards are well down the order of priority for creditors. They are on a par with Her Majesty’s Revenue and Customs, suppliers and unsecured creditors, but behind secured creditors, the costs of insolvency, and debts due to preferential creditors and employees. I do not argue too much with the order of creditors other than to say that employees should never be an afterthought. My point is simply that gift card holders do not belong on a list of creditors at all. It is not possible to exchange gift vouchers for cash, which is further proof that they are not a form of credit as there is never any prospect of getting back one’s money. It would be bizarre if this were permitted when a company went into administration. Rather, it should be possible to redeem one’s vouchers. That would resolve some of the concerns of the Association of Business Recovery Professionals about the knock-on effects of promoting holders of vouchers up the list of preferred creditors. R3, as it is known, is anxious that were card holders prioritised, businesses and suppliers, which are currently with card holders in the fifth tranche of those to be paid by administrators, would be even worse off.

I mentioned my experience with Portsmouth FC’s administration, and I understand only too well the hardship that is borne by small businesses that must extend credit in order to get the trade they need to survive when they are left hanging on administrators’ decisions. The same goes for employees, who are placed in the invidious position of waiting in limbo to know whether they will have a job in the future or be paid for the work they have already done.

There is also a concern that preferred creditors—those who issue secured loans—would be more wary of extending cheap or reasonable credit in the future if the list of preferred creditors were to be expanded to include gift card holders. At a time when small businesses and retailers are still concerned that lending is not getting through to the degree that is needed, that concern must not be dismissed.

R3 has put forward three possible solutions—a requirement to purchase bonds against the value of issued gift cards; the ring-fencing of the money used to buy cards until they are redeemed; and the extension of the 2006 Act to include purchases under £100. However, each of these solutions has problems. In the case of the first two, they would handicap solvent businesses by restricting cash flow and they could make administration more likely. Equally, extending the 2006 Act would come into effect only if administration procedures began, but cash buyers would still be out in the cold.

If one takes all of these factors into account—the need to protect the viability of going concerns and to treat gift card holders equitably, without undermining lending or supplier confidence, or disadvantaging employees

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—the solution seems clear. If vouchers are allowed to be redeemed, the administrator does not need to surrender the money that it has on deposit through the sale of gift cards. Instead stock, which would be very likely to be sold off at a generous discount to raise money quickly, would be exchanged for the vouchers.

Jessica Morden: The hon. Member has made some really important points. Does she agree that, at the very least, some kind of warning should be put on gift cards or vouchers? That would be a start—telling people what risk they face if things go wrong. It would also be a good way forward.

Penny Mordaunt: I agree absolutely with the hon. Lady. I have already said that there are products out there that would do the same thing as some of these gift vouchers and that could be exchanged for goods at an enormous number of retailers. Clearly, if people were aware of those particular e-money products and of how exposed they make themselves by not buying them, they would go and buy them. So she is absolutely right to point out that raising awareness is half the solution to this problem.

If the gift voucher holders were allowed to redeem those vouchers in exchange for goods, that would be done at pre-insolvency prices, which is after all the basis on which the cards were bought. Therefore, the impact on the administrator would be more modest than otherwise. Furthermore, the goodwill of the card holders would be sustained. The fact that they hold vouchers for a specific shop suggests that they would like to buy its goods, and they are the very people on whom the administrator would rely during a post-insolvency sale. Indeed, treating gift card holders better could make the administrator’s life much easier.

I do not pretend that this problem is easily solved, but it would be helpful if the Department for Business, Innovation and Skills recognised that there was a problem and that a solution was required. I have raised this matter in the House and I have written a number of times to the Minister who is here in Westminster Hall today. In one of the replies that I received, it was even acknowledged that gift cards are considered to be pre-payments for specific goods and services, rather than cash or an extension of credit—quite. However, the Department is content to continue to allow gift card holders to be treated as creditors.

I appreciate what the Minister has said to me in the past, namely, that in administration proceedings there is only so much money to go round and that administrators have to act in the best interests of creditors as a whole. However, it is apparently accepted that voucher holders are not creditors, so setting aside stock for them would not be to prefer one creditor over another. Indeed, the process might even lead to the sale of other stock for ready money. Her Majesty’s Treasury has shown a willingness to engage on this matter, and I hope that BIS will now be prepared to do so too.

11.14 am

The Parliamentary Under-Secretary of State for Business, Innovation and Skills (Jo Swinson): As always, it is a pleasure to serve under your chairmanship, Mr Bone.

I thank my hon. Friend, the hon. Member for Portsmouth North (Penny Mordaunt), for securing this debate, because she raises an important issue. She has

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been a long-standing advocate for moving the holders of gift cards and vouchers up the order in which creditors are paid when there is an administration or an insolvency procedure. She has been that advocate for very sound reasons. We all understand the distress that is caused when a business—whether it is a major high street chain or a smaller local company—goes into administration. People are very disappointed if they are holding gift cards, which often have been actual gifts to them, but those cards end up being worthless. Clearly, that situation causes upset and I understand the need and the desire to address it.

Indeed, the Government are keen to try to ensure that those types of problems do not continue. A huge amount of work has been done with the hon. Member for Newport East (Jessica Morden) and others on the particular issue of Farepak, to try to get the best deal for those people who faced those appalling circumstances just before Christmas a few years ago. We have seen some positive moves by parts of industry that perhaps show the way for us to find some solutions to this issue; I will discuss them later. The specific solution of moving gift-card holders up the hierarchy is not necessarily the best solution; there may be other solutions and I hope to explore some of them in my remarks.

Let me address the particular issue of whether we should change the order in which creditors are paid. Both my right hon. Friend the Business Secretary and I have listened very carefully to a range of views on whether consumers with pre-payment cards and vouchers should be made preferential creditors. However, the problems of doing so—some of which my hon. Friend touched on in her speech—prove that this is not a solution that is especially desirable for vulnerable groups, such as employees or small and medium-sized enterprises that had supplied goods to the business in question. Much as I sympathise with all of the people in that situation, there are individuals for whom there is a real responsibility to try to get as much money back as possible. Just looking at one group in particular is perhaps not helpful; we need to look at all the individuals who are affected by an insolvency.

Unfortunately, as my hon. Friend said, after an insolvency, an administration or a company not doing as well as it would have wanted to, a limited amount of money is available. Ultimately, that business has not been successful, and that money must be spread out among the creditors. The question is how that pot of money should be divided up.

Among those seeking to be reimbursed from that limited pot of money are employees who may have worked but not been paid their full wages; business suppliers, many of which may be the SMEs that we all want to support in order to help the economy, particularly in our own constituencies, and we are well aware of the challenges that small businesses face; financial institutions; and Her Majesty’s Revenue and Customs. The difficulty is that, with that limited pot of money, if we were to change the preferential creditor status to improve the position of holders of gift cards, that would necessarily make the position of those other creditors worse. Therefore, it is a win-lose situation, not a win-win situation.

I am particularly concerned about two of those groups—employees and SMEs. Just like gift-card holders, business suppliers fall within the category of unsecured creditors.

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Therefore, they often receive only a fraction of what they are owed in these cases. That can have a particularly disproportionate impact on their finances, and we need to ensure that that is uppermost in our minds when we consider this issue. Making gift-card holders preferential creditors could, especially if large numbers of gift cards were issued, reduce the already scarce funds available to those supplier businesses, which are arguably in as much need—if not more so—of those funds to continue operating and continue employing people. We do not want to end up with a system where more businesses are suffering financial distress. So, the suggestion that we do something that could have a negative impact on the financial viability of small businesses must be treated with a great deal of caution.

With employees, there is a slightly different situation, because they are already in the pool of preferential creditors. However, if we add more people to that pool, of course the money that is available must go further. Employees could be in an even worse situation, in already difficult circumstances. Of course, we feel for gift-card holders when a high street chain goes bust, but we also feel for the employees, many of whom have huge uncertainty and do not know whether they are going to keep their job, whether the company will be bought out or whether some branches will remain open. If they do not even get paid for the work that they have already done—although some schemes enable them to reclaim some amount towards the payment they would have received—they end up out of pocket. That is a particular concern when considering such a change.

My hon. Friend also mentioned secured creditors, such as banks, which do not necessarily always elicit the most sympathy in this House or in the wider public. However, if lenders cannot rely with confidence on the security given by borrowers, they might become less inclined to lend in the first place or might factor that risk into increased costs of borrowing. As my hon. Friend said, there are already challenges in respect of bank lending to small businesses. Putting further hurdles in the way and burdens in place could limit access to working capital for a business that might already be under financial pressure and, ironically, could perhaps hasten the failure of such a business and even its insolvency. These issues and impacts mean that that solution is not necessarily the right way to address the matter. My hon. Friend will not necessarily be happy with that answer, but I hope that she understands why the Government take that view.

Penny Mordaunt: I think that I am on the same page as my hon. Friend the Minister. My argument is that we should not be treating these people as creditors at all. A number of solutions have been discussed this morning. For example, the hon. Member for Newport East mentioned awareness; we have e-money products; and I have suggested that such consumers should not be treated as creditors and that they could receive preferential treatment in exchanging the vouchers for goods, which is what they originally wanted to do. I am keen that the Minister does something. There is considerable evidence that companies are continuing to sell vouchers even though they know that they are going to go into administration and cannot honour them.

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Jo Swinson: My hon. Friend raises a good point. I will come to the potential solutions that we think could alleviate some of the pressure for consumers. It is quite right to say that that is where we need focus.

Some issues that my hon. Friend raised are worth pursuing, particularly those relating to the 2006 Act. I am happy to take up some of the suggestions raised by R3 and get back to her. That would help in some cases, but where payments are made in cash, which is often the case for the small amounts on gift vouchers, that protection would not necessarily be extended. Various solutions may assist.

We have been trying to work with the industry, challenging it to do more to deal with these issues and support these consumers. On whether goods will be able to be bought in exchange for gift cards, of course, it is not always the case that they cannot be. As my hon. Friend mentioned, in many cases administrators allow vouchers to be redeemed, although there is often an initial period of uncertainty, as in the example of Nicole Farhi last week, as she said. This is done for sound business reasons, where the administrator wants to preserve the goodwill of a business if their objective is to sell it on as a going concern for the benefit of all creditors. That can have real business benefits.

One challenge for businesses that know they are going into administration is that they are trying to ensure that they are as viable as possible and are maximising their business assets, which can be one reason why gift cards and gift vouchers continue to be sold. But if some other solutions could be put in place by industry, that may not need to be a problem.

There are four ways in which industry could be encouraged to think about how it can further protect consumers. First, as has been mentioned, the Electronic Money Regulations 2011 provide protection for prepayments when made in card form. My hon. Friend mentioned the One4all card and there is also a system operated by O2, where a card loaded up with money is then usable at a wide range of outlets, through the card issuer systems. It is not restricted to a single retailer or a group of retailers. Such cards are treated differently; effectively, much more like currency—like cash. If more gift cards were delivered through those open loop systems, that would be one way that the industry could help to protect consumers.

Secondly, there is the good example of the Co-op, where payments made by consumers can be held in a separate trust-protected account. The Co-op Christmas savings has now moved to this model, which is an excellent initiative. It deserves huge credit for doing this and recognising that this gives their consumers extra benefit, and it is another reason for consumers who want to save for Christmas in that way, with an organisation or a shop such as the Co-op, to do so. It is also important that the Co-op managed to do this quickly, without incurring significant additional expense and within the existing constraints of its operating systems. I encourage others to follow such a model.

Thirdly—we need to challenge the industry on this—gift card and voucher issuers should consider adopting an industry code of practice, with specific commitments on the protection of customers’ prepayments. The Trading Standards Institute has a consumer codes approval scheme, with core principles on the protection of prepayments and deposits. The widespread adoption

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of those principles by the industry would be a clear message to administrators about the industry view on how consumers should expect their prepayments to be treated.

Fourthly, it is also worth exploring whether industry could introduce insurance-backed protection of prepayments. This already works well within the package travel sector. Such options may be part of the solution more widely within the retail sector and may be able to protect consumers.

The hon. Member for Newport East mentioned having a warning system on gift vouchers. This has merit, because one challenge is the lack of information. People assume sometimes that buying a gift voucher is like having cash, rather than, as the hon. Lady highlighted, making them a creditor to a business. Making it clearer to consumers up front that there is a risk, although generally that risk will be small, might mean that consumers would think twice about buying a gift card from a certain company, or set of companies, and might not leave it sitting in a drawer, gathering dust for months, instead deciding to spend their gift because there is no guarantee—it is not like having cash sitting in their purse—and there is a level of risk with this product. Given that there is currently a level of risk with this product, it is appropriate that consumers should be aware of that. Informed, empowered consumers are an important part of having a stronger economy, because we need them to have confidence to go out there and buy products and gifts. Any measures that can enhance that would help.

We hope that the consumer bill of rights will be introduced later this year. Hon. Members will be aware

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that the draft was published a few weeks ago. It is, rightly, going through pre-legislative scrutiny in this House. A range of protections is built into the Consumer Rights Bill and the associated consumer rights directive, which has come from Europe and will be introduced in the UK through secondary legislation. Those protections relate to how prominent, transparent and up-front the information that consumers need before making decisions needs to be. Hon. Members have mentioned warning labels, or similar information—a key point—which should perhaps be included for consumers.

I hope that legislation is not the answer and that the industry is able to get its act together and recognise the concerns expressed by hon. Members from all parties about this issue. I am sure that, if the industry does not act, hon. Members will wish to mention that during the progress of the Consumer Rights Bill. I hope that, by the time we get to debates on that Bill we will have some positive news to report on what industry has been able to do.

I thank my hon. Friend sincerely for raising these issues and for her campaigning and tireless work. I hope that our pursuit of a range of options, which we hope that industry will also take up, shows that there can be a positive way forward. I also hope that my hon. Friend and other hon. Members interested in this issue will continue to work with me and the Government to encourage the gift card and voucher industry to move swiftly to develop practical and reliable ways to restore consumer confidence and protect consumers’ money.

11.30 am

Sitting suspended.

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Zero-hours contracts

[Nadine Dorries in the Chair]

2.30 pm

Nadine Dorries (in the Chair): Gentlemen, it is very warm outside and this is a one and a half hour debate, so if anyone wishes to remove their jacket, I am happy for them to do so. Also, because this is obviously a popular debate and we are assuming 15 minutes for the opening speech and 30 minutes for the wind-ups, I ask for speeches to be kept to 15 minutes as I suspect there will be a number of interventions.

Julie Elliott (Sunderland Central) (Lab): It is a great pleasure to serve under your chairmanship, Ms Dorries. I am grateful to have secured this debate on an issue on which I and many other hon. Members have been working for some time.

Zero-hours contracts are contracts whereby a worker is guaranteed no minimum hours and no minimum pay. In this country, we essentially have a large pool of workers, and employers have no legal obligation to pay them when they are not needed.

Zero-hours contracts have a widespread and deeply damaging effect on workers, and I call them “workers” advisedly. People employed on zero-hours contracts are treated differently to employees, and as such they are second-class staff. People employed on zero-hours contracts earn 40% less than those in fixed-hours employment. A study by the Resolution Foundation shows that, before tax, people on zero-hours contracts earn an average wage of just £9 an hour, juxtaposed with £15 an hour for people with set contract hours. Among graduates, the difference is £10 an hour versus £20 an hour. Firms that use zero-hours contracts have a higher ratio of low-paid staff than firms that do not use such contracts. Zero-hours contracts have traditionally been employed in the hospitality and leisure sectors, but they are increasingly being used in the health, social care and further education sectors.

Nia Griffith (Llanelli) (Lab): Does my hon. Friend agree that being undervalued not only has a cost to the individual? Not having pension contributions, for example, could lead to a much higher burden on the state in the long term than if those people were properly remunerated and were joining proper pension schemes.

Julie Elliott: I totally agree with my hon. Friend. In fact, there are other areas in which having such contracts costs the state money, and I will address that later.

According to the Government’s own estimates, nearly a quarter of major British employers use zero-hours contracts. The 2011 workplace employment relations study found that the number of firms with workers on zero-hours contracts increased from 11% in 2004 to 23% in 2011. The recession and the lack of recovery are hitting Britain’s lowest paid workers hardest.

Zero-hours contracts are not new, and they were not borne out of the financial crisis or the recession. The figure of 200,000 people employed on zero-hours contracts in 2012 is almost certainly an underestimate, as many people will not realise that they are on such contracts.

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Jessica Morden (Newport East) (Lab): Although I know from my constituency work that the use of zero-hours contracts is increasing, it is difficult to assess what the exact figure is for places such as Wales—I think Wales would be particularly hard to assess. That in itself is a problem, because it is difficult to assess the impact if we do not know the scale of the issue.

Julie Elliott: That is absolutely correct. In fact, a number of Departments have responded to parliamentary questions by saying, “We don’t know.”

Many people will not realise that they are on zero-hours contracts. If, as it seems, zero-hours contracts are part of the new labour market, and not simply a reaction to the recession, we need to show our willingness to combat their worst excesses. Zero-hours contracts affect only approximately 1% of the work force, but that is 1% of a very large number and cannot be ignored.

Although they are on the increase in the public sector, zero-hours contracts are still more prevalent in the private sector, which is responsible for 85% of all such contracts in the UK. It is clear why zero-hours contracts appeal to employers, as they reduce risk by conferring greater flexibility to enable them to weather fluctuating demand. We want to do what we can to make it easier and more attractive for employers to hire new people, but all too often zero-hours contracts are the answer. Staff who have worked for their employer for less than a year make up more than a third of all zero-hours contracts. Young workers, newer workers and women are shouldering the burden while employers enjoy the benefits.

Robert Flello (Stoke-on-Trent South) (Lab): I congratulate my hon. Friend on securing this debate. Is not one of the fundamental issues that zero-hours contracts are about transferring the burden and the difficulty of dealing with a contract from the employer to the most vulnerable and the lowest paid? How can it be in any way fair to transfer that burden from the employer to someone right at the bottom of the pile?

Julie Elliott: It simply is not fair, and it simply is not acceptable in most cases.

Having a high number of employees on zero-hours contracts is also potentially damaging to employers as it can lead to inadequate staffing levels, the loss of training and skills development and an inability to attract and hold on to the highest quality staff. Too many people are living a life on call, and I hope this debate will move the conversation forward from discussing the existence of such contracts to evaluating solutions to the problem.

Zero-hours contracts can have a devastating impact on people’s lives. Workers employed on such contracts have little certainty of their expected weekly earnings and therefore cannot plan their family finances. People with employee status have several legal rights that workers do not, such as the right not to be unfairly dismissed, maternity rights and redundancy rights. The inherent variability of earnings throws into doubt an individual’s eligibility to claim various forms of benefits. The disruption to family life that results from frequent short-notice requirements to work makes so many things, from child care to the weekly shop, nearly impossible to plan.

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Mrs Mary Glindon (North Tyneside) (Lab): I also congratulate my hon. Friend on securing this debate. I worked for nearly two years on a zero-hours contract in retail. Will she confirm that it is often women who are in this situation? To add to what she said about people not knowing what they are going to earn from week to week, does she agree that it is also about their well-being and their sense of value in the workplace? People on such contracts do not necessarily feel that they belong to a company.

Julie Elliott: I totally agree. As I said earlier, people on zero-hours contracts are second-class employees—they are not employees but workers, which is a big difference.

People employed on such contracts cannot take advantage of the Government’s child care help, because they do not know when they will need child care. And they cannot take advantage of housing schemes, because without a regular income, they cannot get a mortgage. Without a guaranteed income, many cannot even enter the rental market. Some people on zero-hours contracts are having to rely on payday lenders because they have not received enough hours in a given week, which pushes them further into debt.

On average, people employed on zero-hours contracts tend to work 10 fewer hours a week than those on more conventional contracts—21 hours versus 31 hours. That is a significant factor in the level of underemployment in the UK. Some 18% of those on a zero-hours contract are seeking more hours or a different job, compared with 7% of those on a regular contract.

Mr David Anderson (Blaydon) (Lab): I congratulate my hon. Friend on this worthy debate. What she has just said proves the fallacy of what we hear every day from the Government on the great job they are doing in increasing employment in this country. What they are really doing is taking people from secure, well-paid jobs, particularly in the public sector, and putting them into jobs where absolutely no respect is shown for their life or for anything else.

Julie Elliott: That is absolutely correct, and I will talk about it later.

The growing use of zero-hours contracts may go a long way towards explaining why such a weak economy has managed to maintain a relatively low unemployment rate. The Prime Minister often refers to the 1 million or so private sector jobs he seems to have personally created since 2010. Given the conveyor belt of awful numbers emanating from the Office for National Statistics since the election, one can hardly blame him, but it is imperative to delve deeper into that claim, because as we all know, not all jobs are created equal.

My hon. Friend the Member for Dumfries and Galloway (Mr Brown) asked some parliamentary questions on the kind of jobs that are being created, and the Government have been unable to provide clear answers.It is imperative to ascertain how many of those 1 million-plus jobs are minimum wage, how many are zero or small-hours contracts, how many are agency contracts and how many are outside London.

Katy Clark (North Ayrshire and Arran) (Lab): Is my hon. Friend aware that as a result of the Postal Services Act 2011, it is now possible for other providers such as

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TNT to enter the mail delivery market? In London, TNT workers on zero-hours contracts now deliver our mail. Many are sent away every day because there is no work for them. Does she think that this is the direction that the Government have in mind for our economy?

Julie Elliott: At the moment, it seems to be where this Government are heading. Regulation is lacking where perhaps a little more regulation is needed.

Anas Sarwar (Glasgow Central) (Lab): I congratulate my hon. Friend on securing this debate. This is a problem not just in the private but in the public sector. The Financial Times found that in the last two years, the number of zero-hours contracts increased by 24%. Does that not show that this Government have the wrong priorities?

Julie Elliott: Absolutely. I will move on to the public sector shortly, and particularly to some of the alarming figures on the health service that we have received through freedom of information requests.

After receiving an unsatisfactory answer from the Secretary of State for Health to my written question asking how many people in the national health service were employed on zero-hours contracts, I submitted a freedom of information request to each NHS trust in the country asking how many people had been employed by the trust on zero-hours contracts only over the past five years: that is, those without a substantive contract in addition to the zero-hours contract. I also asked for a breakdown of what positions those people held, including any bank staff. Of the 88 trusts for which I have data, 77 employed at least one person on a zero-hours contract and one third employed at least 500. Together, the top 10 trusts employed a staggering 10,800 people on zero-hours contracts. Perhaps more remarkably, thousands of NHS nurses and midwives were on zero-hours contracts.

It is imperative to point out that those figures are for workers on zero-hours contracts only. They do not include employees who hold a substantive post with their trust and choose to have a zero-hours contract in addition to their primary employment, which allows them to take advantage of extra shifts, such as nurses who work on the bank as well as doing their normal shifts. The figures reflect the number of people who hold only a zero-hours contract.

As I said, there are clearly some people for whom a zero-hours contract is an added bonus, but the majority are not in that position. For some people in some circumstances, zero-hours contracts provide the flexibility and extra work that they want, but they leave far too many people without financial security.

Zero-hours contracts in health care are by no means restricted to trusts and hospitals. The Centre for Employment Studies Research has produced a study touching on the use of zero-hours contracts in social care in five councils in south-west England. In 2011-12, more than half of all domiciliary care workers were employed on zero-hours contracts. Figures uncovered by the shadow health team have found that nationally, more than 300,000 social care workers are employed on such contracts.

Derek Twigg (Halton) (Lab): I thank my hon. Friend and congratulate her on an excellent speech. The Department of Health wrote to me in an answer today

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that there were 4,200 adult social care workers on zero-hours contracts. Is she concerned about the impact on social care and the security of the people who work in that field?

Julie Elliott: Absolutely. People who work in social care work with vulnerable people, often on their own, and turnover and movement of staff in that field are not good. Stability and continuity are needed to give people the best possible care. I fail to see how calling people in—often with very little notice, so that different people attend the same person—is the best way to provide social care in this country. According to the figures that I have, 20% of all people working in social care are on zero-hours contracts, rising to 60% for domiciliary care.

Mr Anderson: This morning we met a Unison group and had discussions with home care workers who work in this city. Not only are they on zero-hours contracts, they do not get paid for time spent travelling between houses, they have no pension rights, their travel costs are not paid, they must pay for the phone calls when they ring in to say each client is okay and they must do training in their own time. Does that not show a huge lack of respect for some of the most valuable people in this country, who do tremendous work? Does it not show how the Government’s deregulation mania is driving such people into a serious position?

Julie Elliott: I could not agree more with my hon. Friend. I will come to this later, but I question whether the people working in that field on zero-hours contracts are actually being paid the minimum wage, after all the costs that they must pay themselves are deducted. If they were employed, they would not have to do so.

The numbers simply are not conducive to the world-class care that patients deserve. Reflecting on the corrosive nature of zero-hours contracts, one care worker interviewed for the CESR’s study said:

“I can’t plan my life, not knowing when exactly I am going to be working, I can’t plan things…I have gappy rotas, periods when I am not working, odd half-hours. I take a book with me. I know that I am not getting paid, sometimes it’s really depressing. One of my colleagues said she was going out from 3 pm to about 7 pm, and actually there was only two payable hours in that whole period”.

That confirms what my hon. Friend just said.

How can we expect care workers or NHS nurses to have total commitment to an organisation or company that has none toward them and puts them on zero-hours contracts? They leave nurses and carers worried and looking for other jobs instead of focusing on patient care, leading to worse care for patients.

Not incidentally, we must also look at ourselves—at the House of Commons. We should be setting an example of good employer practice. According to the House of Commons Commission, as of 31 January 2013, nearly 9% of House of Commons staff are employed on a zero-hours contract.

In their responses to my FOI request, many trusts were at pains to explain that workers on zero-hours contracts were not obliged to accept any work offered. That is absolutely right; such an obligation would be

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illegal. It would be servitude. That is not much of a defence. There is also growing evidence to suggest that the choice to turn down work is illusory. Often, employers will cut the hours of any worker who turns down work, a practice known as zeroing down. The Resolution Foundation interviewed a domiciliary care worker in Newcastle who said:

“When I started out at my current job, I did nine weeks without a single day off and I was regularly working anything up to 55-60 hours a week. Since putting my foot down and refusing to work every other weekend…my hours have dried up.”

For many workers, the flexibility of zero-hours contracts is a one-way street that benefits only the employer. There is even evidence that some employers zero down workers’ hours simply to avoid the costs of redundancy or as punishment for reporting unfair treatment.

What needs to be done? We need to discuss concrete solutions to the zero-hours contracts crisis. Suggestions include regulations that state that if a worker’s average normal working hours are in excess of their contracted hours, they have the right to have their real-world hours written into their contract. We also need to raise awareness of zero-hours contracts first and foremost among people employed on them. Job adverts offering positions on zero-hours contracts should say so explicitly.

My right hon. Friend the Leader of the Opposition has proposed living wage zones and tax breaks to persuade companies to pay their employees a living wage, in order to boost productivity and cut the welfare bill.

Fiona O'Donnell (East Lothian) (Lab): I am grateful to my hon. Friend for securing this debate and giving me the opportunity to contribute. Does she agree that it is essential that any training that staff require should be paid by the employer?

Julie Elliott: Of course it should. Not paying is a complete lack of obligation by employers to the people who work for them, whether they are workers or employees. Their businesses prosper because those people work for them, and people should be looked after properly.

Paying employees a living wage would boost productivity and the welfare bill. The Institute for Fiscal Studies has calculated that for every £1 spent paying a living wage, the Treasury saves 50p on tax credits and benefits. The Resolution Foundation has calculated that if everyone now receiving the minimum wage received the living wage, there would be a £2.2 billion net saving, comprised of higher income tax and national insurance receipts. There is growing evidence that living wages boost productivity, motivation and performance, and reduce leaver and absentee rates, thereby offsetting the cost of the higher wage. The people who reject that analysis are the same people who said that the national minimum wage would lead to vastly higher levels of unemployment. They were wrong; it simply led to higher wages.

Progress has been made in the past two decades to protect those on zero-hours contracts and agency workers, who are often the same people. The working time regulations, the national minimum wage and the agency workers regulations have done much to improve the rights of such workers, but zero-hours contracts have reached a tipping point where further regulation is now required, because more needs to be done to tackle the

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inequalities and unfair treatment inherent in such contracts of employment. We must strengthen efforts to ensure that employers who abuse zero-hours contracts are brought to order. The tax and benefits system should be updated to reflect the changes in the labour market and to support people on zero or small-hours contracts. The contracts are merely the latest in a long line of ingenious tactics by the less scrupulous employers to keep costs down at all costs, all to the cost of their employees. Once we have addressed some of the worst excesses of zero-hours contracts, I do not want to see equivalents pop up and for us to take years to respond to those as well, with the lowest paid suffering all the while at the sharp end of the employment market.

When I asked the Minister present what the Government were going to do about zero-hours contracts, she stated that they would crack down on any abuse of such contracts. I am pleased that the Secretary of State for Business, Innovation and Skills announced last month that he was undertaking a fact-finding review of zero-hours contracts. He says that only anecdotal evidence of abuse is available, but I think that we are well past the stage of anecdotal evidence.

Many people on zero-hours contracts work fairly regular and often long hours. In such cases, zero-hours contracts are not about flexibility for the employer but about control over the employee. We could call it exploitation. Many workers start early in the morning and are expected to stay at work until late in the evening, with multiple unpaid breaks in between. That is a life lived on call. I welcome contributions from colleagues and the response from the Minister. People on zero-hours contracts, whether they treat our sick, look after our elderly or serve our food, need a commitment from the Government. I look forward to hearing it.

2.52 pm

Lisa Nandy (Wigan) (Lab): I congratulate my hon. Friend the Member for Sunderland Central (Julie Elliott) on securing this important debate. We can see how important it is, because there are literally no seats left on the Opposition Back Benches, although I am sorry to see that concern does not seem to be the same among Government Members.

I am grateful, nevertheless, to the Minister for taking the time to be in the Chamber, because I want to talk a little about the astonishing rise of zero-hours contracts in my constituency, reflecting the national picture mentioned by my hon. Friend the Member for Sunderland Central. The number of such contracts has more than doubled since 2005, and the level of human misery that they are causing has become more and more apparent to me over the past three years. I want to give the Minister the human flavour of what that means. I have real concern about what zero-hours contracts are doing to young people, who are desperate to get into the labour market at the moment, but are seeing their opportunities closed off at every turn.

A young man in my constituency works on a zero-hours contract as a security officer. This young man, as well as being incredibly ambitious for himself and his life, has a difficult background; he came out of the care system, and he needs a level of stability that his job and his employer simply do not provide, which is a concern. Zero-hours contracts are a problem for many of the

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people on them, but for this young man, working in a difficult job and not knowing when or how he will be called or what his income will be from one week to the next, the contract is a particular problem.

When I was preparing for the debate, I looked quickly on the internet at a few of the jobs advertised in Wigan. Similar jobs were advertised: a security officer at Robin retail park, at £6.50 per hour. The advert stated that the job was on a zero-hours contract and that the employee must work as and when required. At least the advert specified that the job was on a zero-hours contract. Many people in my constituency over the past few years simply did not know that they were signing up to a zero-hours or small-hours contract; they were astonished to learn that not only had they got themselves into such a situation, but they could not get out. As my hon. Friend the Member for Sunderland Central said, they were suddenly not eligible for any of the other forms of support available. People feel trapped, and they are desperately in need of a Government who will do something to help them.

Nia Griffith: Has my hon. Friend been approached by constituents who have been forcibly moved from one type of contract to another type? They find that, on the new contracts, all their rights seem to have evaporated. Basically, they have been forced to sign up, perhaps because of some small issue such as wanting flexible hours or some slight change, or because the whole work force is being shifted, and that move is really damaging.

Lisa Nandy: My hon. Friend is absolutely right. I was about to talk about the situation of some care home workers in my constituency, and that is certainly one of the things that happened to them. Furthermore—the point that I want to impress on the Minister—employers who abuse zero-hours contracts are likely to be poor employers; their employment practices on a whole host of issues affect the entire work force. I welcome my hon. Friend’s intervention.

Unison recently produced research which showed that around 40% of people working in care homes or providing social care are on zero-hours contracts. We should all be deeply concerned about the rise of the practice, even if uninterested in the employment rights of the people affected or their families, because the truth is that it must be having an impact on the level of care that we afford to the old, the sick and the vulnerable in our society.

A group of care home workers, all women, recently came to see me. They had been under contract with the council, and they moved from one firm to another as the council changed the contract. They came to see me about a whole range of problems, including zero-hours contracts for some and small-hours contracts for others. They were given extremely short notice of the hours that they were supposed to work, so—as my hon. Friend the Member for Sunderland Central said—they had no opportunity to plan, which was a real problem for those with child care responsibilities, or with other caring responsibilities for elderly relatives or friends.

One woman told me an absolutely astonishing story about a co-worker, who had been told that if she did not take a series of jobs put on to the rota at short notice, she would not be offered hours next time. She had two children, so she had to take them with her on a series of

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shifts lasting for more than eight hours. The young children had to sit locked in the car for most of that time. The firm did not even factor in a lunch break for the worker, which apparently is standard practice. On top of that, she had the children with her, although they were unable to go outside and play; they did not eat and were locked into the car for several hours, which she was absolutely distraught about, but she was left between a rock and a hard place—she has to feed her children somehow, and that was the job she had been offered.

Robert Flello: I am enjoying my hon. Friend’s speech, because it is a good speech, but the things that she is saying are absolutely horrifying. Local authorities up and down the country are in a dire financial situation, but does she agree that they simply should not be touching such companies even with the longest of bargepoles?

Lisa Nandy: I completely agree, and I was about to say that I have been astonished by the slow response of my own local authority. I have tried and tried to get it to take the issue seriously, but the response has simply not been good enough. We should not be spending public money on enabling such employment practices to continue, whether nationally or locally. We all have a responsibility to stop them.

The women also told me about the serious problems that they are having budgeting. They work for the minimum wage, so they do not earn a lot to start with; we all know that the minimum wage is not enough to meet essential needs, so they are already earning poverty pay. On top of that, they do not know what they will be bringing in from one week to the next. As my hon. Friend the Member for Sunderland Central said, that is pushing people into the hands of legal loan sharks. Payday lenders have sprung up throughout Wigan—walking down the high street now, more payday lenders can be seen than practically any other sort of shop. We are collectively colluding in pushing people into the hands of those appalling lenders who cause such misery in people’s lives.

As well as zero-hours contracts, I have come across women with small-hours contracts. They are supposed to be guaranteed a certain amount of work but are not given that work, even though that is specified in their contracts. I have seen several examples of contracts not being upheld at all.

The point I want to impress on the Minister is that when employers treat people on zero-hours contracts in that way and where their use is widespread, it is likely that they are poor employers across the board. One firm in my constituency, Cherish, provides care to elderly people in their own homes. It breaches the minimum wage requirements because its employees are not paid for travel time, which is often hugely variable in my large constituency. Most of those women do not have transport because they cannot afford it as they are not paid enough, so they must travel long distances on several bus routes, which takes a long time, but they are not paid a penny for that. Lunch is not factored in and their payslips are confusing and incomplete. A whole host of problems have been brought to me about Cherish, and when I wrote to the firm I received what can only be

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described as a sarcastic letter thanking me for my interest in the company. I was astonished at the lack of response from the CQC and the local authority.

I echo what my hon. Friend the Member for Sunderland Central said. It cannot be beyond our wit to devise a statutory framework to crack down on those unscrupulous employers, but that must go with a culture of valuing our workers. I have been dismayed by the coalition Government’s attack on the trade union movement in the last few days, which can only hinder the situation of those women and not help it.

Nadine Dorries(in the Chair): Mr Sawford, may I remind you that the time limit on speeches is six minutes?

3.1 pm

Andy Sawford (Corby) (Lab/Co-op): Thank you, Ms Dorries. It is a pleasure to serve under your chairmanship and to follow my hon. Friends. I congratulate my hon. Friend the Member for Sunderland Central (Julie Elliott) on securing this debate. She feels strongly about these issues and is a real champion for people in her constituency and throughout the country who are being exploited by zero-hours contracts. I will echo some of the points that my hon. Friend the Member for Wigan (Lisa Nandy) made and relate them to the experience of my constituents in Corby and east Northamptonshire.

In this Session, I have presented two private Members’ Bills to offer greater protection to the lowest paid and most vulnerable workers in Britain. The Gangmasters Licensing Authority (Extension of Powers) Bill will extend the powers of the Gangmasters Licensing Authority to enable it to regulate employment agencies in all sectors of the economy. That is combined with my Zero Hours Contracts Bill, which will prohibit the use of zero-hours employment contracts and end the scandal of employers requiring workers to be available for work when there is no guarantee of available work. I will go further than other contributors to this debate and say that zero-hours contracts should be banned. A contract of employment clearly implies that there is some employment. All too often the problem with zero-hours contracts is that people are not given any employment, yet they are required to attend for work.

I hope the Bill will become law, but whether that is now or later depends on Parliament. I want to generate a debate about how we can better protect the lowest paid and most vulnerable workers from being kept in a permanently fragile and uncertain state of zero-hours employment. That is why I am pleased to contribute to the debate today.

The Office for National Statistics estimates that at least 200,000 people are employed on zero-hours contracts in the UK, of which 75,000 are aged 16 to 24. We know that that figure is a huge underestimate, and I have begun to challenge it to reveal the true situation. Just last week, a written answer from the Minister of State, Department of Health, who is responsible for care and support, revealed that 307,000 people work in social care alone on zero-hours contracts. If the labour force survey claims that 20% of people on zero-hours contracts are working in the care sector, I am confident in saying that the true number of people in this country on zero-hours contracts could be approaching 1 million.

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Mr Gregory Campbell (East Londonderry) (DUP): Does the hon. Gentleman agree that what should flow from the review by the Secretary of State for Business, Innovation and Skills is exactly what he is homing in on: a much more accurate estimate of how many people are affected? When we try to determine what needs to be done to help those people, we need to know how many are affected.

Andy Sawford: The hon. Gentleman is absolutely right and, if he will forgive me, I will come to that shortly.

It is well known that zero-hours contracts started in specific sectors of the economy, but are now widespread in all sectors, including in my constituency. Hundreds of constituents have contacted me about them. People tell me about waiting for a call or turning up at the workplace day after day, only to find that there is no work, yet their contracts make it difficult to find alternative employment or to claim jobseeker’s allowance. Like my hon. Friend the Member for Wigan, I have heard examples of people making child care arrangements or paying for transport to work and then waiting hours before being told they are not needed. Others have told me that because of zero-hours contracts they are unable to get a bank overdraft, a mortgage or car finance.

Of those on zero-hours contracts, 70% are for permanent jobs. How can it be right that someone in a permanent job is not given a permanent and proper contract of employment? More than 80% of people on zero-hours contracts are not looking for another job. They want to remain in employment, but they want that employment to be fair and secure.

A few weeks ago, the Resolution Foundation published an excellent report stating that those employed on zero-hours contracts receive lower gross weekly pay, and that workplaces utilising zero-hours contracts have a higher proportion of staff on low pay. In my constituency, zero-hours contracts and agency workers create a two-tier work force with permanent employees being paid better and having security of employment, but many others are paid incredibly low wages and are exploited from week to week.

The argument is that zero-hours contracts offer flexibility, but I would argue that if those contracts are justifiable, that flexibility should be beneficial to both employers and employees. In most cases, that is simply not so, particularly in low-wage sectors. Workers on those contracts have no control over the hours they work, the amount of money they earn each week or even the breaks they take. Reports show that care workers on zero-hours contracts are not paid for travel time or gaps between appointments. Unison published some excellent research on the impact on social care. I have a personal concern about that and I urge the Minister to look at it in detail. I would have said more about it if I had had more time.

Zero-hours contracts are just the tip of the iceberg. My hon. Friends have called for a review of the whole culture of work in this country, particularly as it has developed during the recession and in recent years as our economy has flatlined. Under-employment is generally too high in all its forms. Self-employment has been rising and bogus self-employment is a big issue. We have particular issues with Swedish derogation contracts that guarantee minimum hours of pay between agency assignments to exempt people from minimum pay.

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I am pleased that the Minister met me and a delegation from Corby earlier this year to look at these issues. I am also pleased—I thank her for this—that she supported an initiative by the Employment Agency Standards inspectorate and Her Majesty’s Revenue and Customs to look at the issues in detail in Corby. The initiative was taken in my area, and I was not surprised to see the level of exploitation. When visiting agencies, they found more than 70 breaches of employment law, and HMRC put a figure of £100,000 on the money owed to local workers in my constituency. I urge the Minister to provide proper resources to HMRC’s minimum wage department and to support the vital role of the Employment Agency Standards inspectorate. It protects the most vulnerable people in my constituency and around the country. It should be better resourced, it should do more, and we should support it.

What do I want? I want more than an informal review. I want a proper formal review by the Government to look at the scale of zero-hours contracts, and a jobs market that identifies good practice. I want to explore the possibility of a ban. Zero-hours contracts have been banned in Luxembourg, Belgium and Lithuania. There are opportunities to develop new forms of flexible employment contracts and I urge the Minister to look at the work of the Union of Shop, Distributive and Allied Workers in this area.

3.9 pm

Mr Iain McKenzie (Inverclyde) (Lab): It is a pleasure, Ms Dorries, to serve under your chairmanship this afternoon. I congratulate my hon. Friend the Member for Sunderland Central (Julie Elliott) on securing this important debate. It seems that austerity has sparked some employers to introduce zero-hours contracts, which they see as the ultimate flexible employment option.

Zero-hours contracts offer no guaranteed work. They form part of the general disregard for decent terms and conditions. Unfortunately, employers have increasingly turned to such contracts. Typically, as we have heard, an individual undertakes to be available for work, but the employer does not undertake to provide any guaranteed hours and pays only for the hours worked.

Zero-hours contracts have been widely used in various employment sectors, and a survey by the Industrial Relations Service suggests that 23% of employers now include zero-hours contracts as one of their employment options. The Office for National Statistics found a major surge in zero-hours contracts in 2012, with the number of people on such contracts peaking at 200,000. As we have heard, the private care sector has been particularly vulnerable to this practice, and a recent survey of home care workers found that more than 40% were on zero-hours contracts.

Zero-hours contracts undermine employment rights and hit young workers and women hardest. For staff, they entail huge drawbacks by comparison with permanent, regular work. There are no guaranteed, regular earnings to provide certainty over meeting bills or planning for the future. The variability of earnings also throws into doubt individuals’ eligibility for various benefits, creating even greater uncertainty over income.