Draft Conduct of Employment Agencies and Employment Businesses (Amendment) Regulations 2014
The Committee consisted of the following Members:
Abbott, Ms Diane (Hackney North and Stoke Newington) (Lab)
Ainsworth, Mr Bob (Coventry North East) (Lab)
Ali, Rushanara (Bethnal Green and Bow) (Lab)
† Birtwistle, Gordon (Burnley) (LD)
† Bruce, Fiona (Congleton) (Con)
† Doughty, Stephen (Cardiff South and Penarth) (Lab/Co-op)
Dowd, Jim (Lewisham West and Penge) (Lab)
Hepburn, Mr Stephen (Jarrow) (Lab)
† Maynard, Paul (Blackpool North and Cleveleys) (Con)
† Mosley, Stephen (City of Chester) (Con)
† Murray, Ian (Edinburgh South) (Lab)
Phillips, Stephen (Sleaford and North Hykeham) (Con)
Simpson, David (Upper Bann) (DUP)
† Smith, Chloe (Norwich North) (Con)
† Stride, Mel (Central Devon) (Con)
† Swinson, Jo (Parliamentary Under-Secretary of State for Business, Innovation and Skills)
† Tredinnick, David (Bosworth) (Con)
† White, Chris (Warwick and Leamington) (Con)
Oliver Coddington, Committee Clerk
† attended the Committee
Second Delegated Legislation Committee
Monday 8 December 2014
[Mr George Howarth in the Chair]
Draft Conduct of Employment Agencies and Employment Businesses (Amendment) Regulations 2014
4.30 pm
The Parliamentary Under-Secretary of State for Business, Innovation and Skills (Jo Swinson): I beg to move,
That the Committee has considered the draft Conduct of Employment Agencies and Employment Businesses (Amendment) Regulations 2014.
It is a pleasure to serve under your chairmanship, Mr Howarth, in this rather chilly Committee Room. I hope, none the less, that the debate will be warm in welcoming the regulations.
In the Government’s plan for growth, we set out our ambition to create a competitive and supportive business environment that allows businesses to establish themselves, grow and employ people. An important part of that ambition is the need to achieve a strong and efficient labour market that gives people opportunities to find the right jobs and that allows employers to access labour that matches the skills they need. To fulfil that, we need to achieve a flexible, efficient and fair labour market that encourages job creation and makes it easy for people to find work and stay in work.
The recruitment sector plays an important role in the labour market by matching the demand for jobs to the demand for workers. The sector is regulated by the Employment Agencies Act 1973 and the conduct regulations. However, the current legislation does not regulate where employment agencies place advertisements for vacancies. The Government are concerned that some agencies may be advertising British-based jobs in other European Economic Area countries and in languages other than English. That means that workers in Britain do not always have the opportunity to apply for jobs that are, none the less, based here. That concern was raised by both sides of the Committee that considered the Immigration Bill last year.
The Government believe that overseas-only advertising undermines the fairness of the labour market, and we want do something about that. We want to create a level playing field for workers in Britain, with opportunities for young people and unemployed people to enter the workplace and gain valuable work experience. It is equally important that workers in Britain have the opportunity to gain skills that can be used to secure permanent jobs.
It is not only the Government who want to ensure that workers in Britain have equal access to job vacancies: indeed, the right hon. Member for Doncaster North (Edward Miliband) has said that he wants to ban employment agencies from recruiting exclusively from abroad, so I hope these measures will receive broad support. The proposed change to the conduct regulations
will require agencies to ensure that, if they want to advertise vacancies elsewhere in the EEA, they must also advertise here in Great Britain in English.The new regulations will apply to all employment agencies and employment businesses in Great Britain that find permanent and temporary work for people. They will apply only to vacancies advertised in EEA countries. Our immigration rules already favour native workers over non-EEA workers, and each position has to undergo a resident labour market test before being advertised outside the EEA.
We do not propose to prevent agencies from advertising jobs overseas or in additional languages: they will still be free to do so if they wish. In addition, in the rare circumstances in which it would make little sense to advertise a vacancy in English in Great Britain—for example, if there is a genuine requirement for a native foreign-language speaker for a particular role—a defence will be available. However, in general, if agencies choose to advertise jobs overseas, they will need to ensure that those jobs are also advertised in Great Britain, either at the same time or in the period of 28 days before advertising overseas. We believe that that will expand both the range of job opportunities open to people in Great Britain and the range of people that businesses may choose from.
Overseas-only advertising is already potentially a breach of the Equality Act 2010. The proposed regulations go a step further by creating a specific requirement to advertise jobs in Great Britain and in English. The new regulations will form part of the conduct regulations enforced by the Employment Agency Standards Inspectorate, which responds to every complaint of potential abuse of the conduct regulations that it receives.
Subject to proper parliamentary process and scrutiny, we hope that this change will come into force by the end of December 2014. I hope that Members will support the statutory instrument.
4.34 pm
Ian Murray (Edinburgh South) (Lab): As always, Mr Howarth, it is a pleasure to serve under your chairmanship. We agree with the Minister and, although her speech failed to warm everyone up in this frozen room, we welcome the measures she is proposing.
The Minister was right to mention the Leader of the Opposition, because he has led the charge against the way in which some rogue agencies exploit their workers. I am glad that she has taken his views on board.
It is worth reflecting on the evidence. The “Evidence Base” in the impact assessment states:
“The United Kingdom has one of the most lightly regulated labour markets in the developed world”.
That was even before some of the changes this Government brought in through the Enterprise and Regulatory Reform Act 2013, the Growth and Infrastructure Act 2013, and various statutory instruments, to liberalise the labour market even further. Having said that, we welcome the changes proposed today.
It is important that we welcome the changes and that they are brought in as quickly as possible, because the number of agency workers and temporary contracts has exploded in recent years, and are at their highest levels since records of agency workers began in 1997. The
latest quarterly data, for the period of July to September this year, show an increase of 36% in the number of temporary agency workers compared with the same period in 2009, and an increase of more than 20% since this time last year. I mention that not really in the context of the regulations before us, but because it shows how the labour market has developed over recent years. That was highlighted during last week’s autumn statement from the Chancellor, in which he championed the unemployment statistics and growth figures. He did not say very much about the deficit figures, but the point is that there is a problem with the underlying components of the labour market, given the number of people currently employed as temporary or agency workers, the fact that the income tax take has stayed flat, despite unemployment falling quite substantially, and the fact that the Treasury had projected a large increase in tax take. That is why bringing in changes relating to agency workers is crucial.We have seen a missed opportunity on zero-hours contracts with the Small Business, Enterprise and Employment Bill, and many missed opportunities with the national minimum wage. The scourge of under-employment is a great problem, as the figures bear out. Anyone who wishes to reduce the deficit by ensuring that people are entering the workplace and being properly paid, so that they can pay their taxes into the Treasury, will hopefully improve some of those figures. It is a pretty stark fact that unemployment has fallen by more than half a million but the tax take is completely flat, compared with the projection.
We welcome the regulations, but the Minister has to consider other mechanisms that may be needed. Has she thought of a licensing system? Given that the Leader of the Opposition has led the charge on agency workers, will the Minister take that step further and consider such a system for agencies, so that the advertising issues can be addressed and agencies can be properly licensed? Such measures could then be added to the licences to ensure that agencies are not in breach. It is difficult to use the Equality Act 2010 or other mechanisms such as the court system to enforce such regulations. A licensing system would enable that.
The Chair: Order. I wish to be courteous to the hon. Gentleman; he is creating context for what I hope will soon become remarks about the regulations before us.
Ian Murray: Thank you, Mr Howarth. I am happy with that direction. The reason why we have these regulations is that there is great concern about the explosion in the number of agency workers and the problem of under-employment in the labour market. We have to ensure that anyone employed by agencies is employed properly. There is another issue: most agencies, particularly those regulated by and under the umbrella of organisations such as the Recruitment and Employment Confederation, do everything properly. We are trying to grab hold of the rogue ones, which are always the most difficult and exploit their work forces.
We have no problem supporting these regulations; they are a good way forward. I would like the Minister to take further steps, perhaps even to work with the industry in developing a licensing system to deal with these issues. I ask her to look at the overall issue of employment, including the explosion in the number of
agency workers and the fact that under-employment seems to be the biggest labour market issue of our time. Those issues give rise to others, such as low pay and people wanting longer hours or more permanent work when unemployment starts to fall.4.39 pm
David Tredinnick (Bosworth) (Con): Curiously, two weeks ago, during a debate on another statutory instrument, we discussed concerns about nurses coming into the country who could not demonstrate proper use of English. Today, we are discussing advertisements that do not show proper consideration for the English language. Having been in this House for a while, I think it interesting that we now have this focus on our national language and its importance. This responds to people’s concerns about their sense of identity. I will not go any further down that route, other than to say that both the measure we discussed two weeks ago and the one before us today will be very much welcomed by the British public—certainly in Hinckley in my constituency, which has low unemployment. We are about to get thousands of new engineering jobs at the Motor Industry Research Association enterprise park. The thought, for people in Hinckley, that jobs are being advertised abroad in a foreign language without being advertised in English or made available to English people will certainly strike a chord.
I absolutely commend what my hon. Friend the Minister is doing on behalf of the Government, but I have one question for her: will she expand a little on how the statutory instrument has come about? What was the scale of the problem? Will she go through the history of how we arrived at this moment? We are attempting to rectify a situation where, for some bizarre reason, English jobs are not being advertised in our own language. I would be most grateful for that.
Stephen Mosley (City of Chester) (Con): Will my hon. Friend also ask about the position regarding Switzerland? Switzerland is not in the EEA but is a member of the single market. Swiss people have the same rights to live and work here as members of the EEA, even though they are not in the EEA themselves.
David Tredinnick: My hon. Friend makes an interesting point. He could have made another about the use of referendums in Switzerland to ensure that the people have their say about what they want. He might like to intervene again, as he is clearly a Swiss expert. This, of course, is relevant to the regulations. I know you have been looking at me, Mr Howarth, and that you might be thinking that I will stray out of order; I will try not to. I recall that the Swiss people voted against a large number of people coming to their country from overseas. Can my hon. Friend help me on that matter? Is he aware of it? Perhaps he would not like to help me. As I am perhaps straying a little, we will leave that.
David Tredinnick: We will leave the Swiss. I would just like to make the point that the Swiss themselves use referendums and are very concerned about their national identity, so Switzerland also falls into this category. I will leave it at that, having been tempted by my hon. Friend the Member for City of Chester. I serve on the
Science and Technology Committee with him, so it would have been discourteous and perhaps not in my interest in the future if I had not given way to him.4.43 pm
Jo Swinson: It is good to have a lively debate on these issues, even though the regulations have been warmly welcomed by Members on both sides of the Committee. The hon. Member for Edinburgh South talked about our lightly regulated labour market, and we should generally be very proud of that; it is good to do business in and can be very flexible. Indeed, we are trying to encourage that flexibility to ensure that the market is genuinely two-way, with flexibility for employers who have to manage demand going up and down, as well as greater flexibility for employees in managing their work commitments alongside the rest of their lives. The extension in June of the right to request flexible working is one example of how the Government are making that a reality for people.
The hon. Gentleman said that it was important to bring the regulations in as quickly as possible. He will doubtless be reassured to hear that we intend to do so by the end of this month, while obviously ensuring that Parliament—not only this place but the other place—is happy with them. He mentioned that the Chancellor highlighted the growth figures and unemployment figures. The Chancellor was absolutely right to do so; that has been a great success story. The hon. Gentleman pointed out that the income tax take has not increased accordingly. However, I am proud that we have taken the lowest paid people out of paying income tax. Some 3.2 million people who were some of the lowest paid in our society now pay no income tax at all, and more than 20 million others have received an £800 tax cut. I campaigned strongly for that at the last election, and I am really happy that we have been able to deliver it in government.
Ian Murray: Yes, the personal allowance has taken people out of tax, but my point was that the Treasury, even taking that into account, projected a double-digit rise in income tax, and it is flat, so that had already been factored into its figures.
Jo Swinson: There is obviously range of different factors that impact on the overall income tax take, and I absolutely recognise that there is more we have to do to boost labour market productivity. It has been helpful that during the downturn, the employment figures have been relatively positive. Obviously, unemployment has still been too high, particularly youth unemployment, as Members will agree. There is more to do on productivity, and the Government are supporting businesses in looking at how to boost productivity through a range of different methods. Just last week, I spoke at an employee engagement summit, which is one of the ways companies can motivate staff to improve productivity, and reap the benefits of a work force that is firing on all cylinders.
The hon. Gentleman asked whether we had considered a licensing system, which used to apply to employment agencies. He also said that most agencies behave properly
and are not where the problem lies, and that is the crux of the reason why we do not have a licensing system across the board for all agencies. Such a system forces perfectly law-abiding businesses to jump through regulatory hoops, yet they are not where the problem lies. With such a system that resource is spread across the whole of industry, whereas the rogue elements that he described as the problem perhaps do not get the attention they need. That is why the Gangmasters Licensing Authority was set up. It looks at areas of specific concern, and that is the approach the Government are taking here. We do not want to impose regulatory burdens on the vast majority of businesses, which are operating as they should, with proper respect for employees’ rights. We also want to ensure that, where there is non-compliance with the law, it is clamped down on hard.We have boosted the resource available for national minimum wage enforcement, addressing one of the ways in which employment agencies or businesses may be breaching the law. This year, importantly, we have also doubled the resources available to the Employment Agency Standards Inspectorate.
Under-employment, which the hon. Gentleman mentioned, has cropped up in labour market discussions. It is worth noting that recent figures show that the growth in jobs has mainly been in part-time positions. A couple of years ago, that may not have been the case, but things are very much moving in that direction. We should recognise that not everybody wants to work full time—we want a market in which people can choose the number of hours that suits their circumstances.
My hon. Friend the Member for Bosworth pointed out the importance of English language skills in many jobs. Certainly within the caring professions such as nursing, I wholeheartedly agree that communication is a basic, key part of that role. He asked how the regulations came about. It is important that we do not overstate the problem. We received complaints about employment agencies advertising jobs in other EEA countries but not the UK. It would not be accurate to suggest that this is a widespread, regular practice. None the less, having received those complaints, we felt it important to act to make sure that all agencies based in Great Britain give people who are looking for work in Great Britain a fair opportunity to apply for those jobs.
On the question of Switzerland, obviously, it is in a particular position that is perhaps closer to EEA countries than non-EEA countries. We will ensure that we keep this issue under review, and if changes need to be made to deal with the Swiss case, when we next amend the conduct regulations, we will look at that. I am not quite sure that the Swiss vote went in the direction that my hon. Friend thought it had; that said, I should not stray too far from the regulations before us and into the specifics of Swiss immigration policy.
With those reassurances, I hope the Committee is happy to approve the statutory instrument before us.