3 Social justice
19. Alongside our work on changes to the constitutional
relationship between Scotland and the United Kingdom, we also
undertook a series of inquiries on issues which have a direct
impact on the lives of the people of Scotland, including student
visas and the work of the UK Border Agency. The main focus of
our work in this area, however, was in relation to employment
issues and the broader theme of social justice. We outline a few
of them below.
Insecure employment
20. Our inquiry into zero hours contracts was borne
out of frustration with what we perceived to be a decline in job
security and employment rights that was affecting thousands of
workers in Scotland.[16]
Zero hours contracts and other forms of casual labour can benefit
workers and employers but our inquiry showed that, too often,
the relationship is unbalanced, leaving the employer with all
of the flexibility and few costs or responsibilities and the worker
in fear of dismissal, denied access to due rights of employment,
often tied to an employer that provided little work, and, in some
cases, earning less than the National Minimum Wage. From evidence
presented to us, it was clear that workers in the higher education
and social care sectors were particularly at risk.
21. The University and College Union told us that
49% of all teaching staff of Scottish Higher Education Institutions
(HEIs)-approximately 4,500 people-were on zero hours contracts.[17]
While the terms and conditions varied across the HEIs, the overwhelming
conclusion of the UCU representatives who gave evidence to us
in April 2014 was that teaching staff on zero hours contracts
regularly worked more hours than they were paid for; as a consequence
their level of pay often fell below the National Minimum Wage.
We heard how staff on zero hours contracts were paid for contact
time with students but that payment for preparation time vastly
underestimated the hours required; that, in those institutions
which did pay for marking, payment rarely reflected the time required;
there was little job security, and teaching posts were not always
advertised because zero hours contracts do not require a proper
recruitment process-meaning the process of employment was not
always transparent.
22. It was shocking to find that academics on zero
hours contracts were not fairly remunerated for all the hours
they worked. Effectively, this meant that some of Scotland's most
prestigious universities were being kept going by a staff often
earning less than the National Minimum Wage. The disconnect between
the hours worked and the hours for which payment is made raised
a further concern, that teaching posts may only be accessible
to those who have family, other work or a bursary to subsidise
them. Appropriate levels of pay is not the only problem with employment
practices in the higher education sector. We heard how academics
were often faced with a lack of job security as their work could
be cancelled with little notice, for example, if an insufficient
number of students enrolled for a particular course.
23. Both the universities of Glasgow and Edinburgh,
from whom we took oral evidence, told us they were reviewing their
use of zero hours contracts. We promised to call them back after
a year to assess the progress of their reviews. It is regrettable
that we have not had the opportunity to do so before Parliament
dissolves however, we note the UCU's letter to us of 23 March
2015 in which they highlight, in particular, the University of
Glasgow's new 'Extended workforce' policy which tightly limits
the use of zero hours contracts.[18]
We call on our successor Committee to continue our scrutiny of
zero hours contracts in the higher education sector, and to particularly
consider whether the dedicated academic staff on which our universities
depend are receiving levels of pay that accurately reflect the
number of hours they must work to fulfil contracted duties and
have sufficient job security to be able to plan their lives.
24. The Government have, at least, recognised that
problems exist in the care sector. HMRC found that out of 183
care sector employers that were investigated, 88 had failed to
pay their workers the National Minimum Wage. This was mainly due
to the non-payment of travel time between appointments, something
which is illegal. We concluded:
Care workers are expected to look after the vulnerable
in society and treat them with dignity yet HMRC have found that
almost half of those employers investigated have shown no such
duty of care to their workforce.[19]
We called on the Government to do more to ensure
that workers in the care sector were properly remunerated and
were reimbursed for expenses associated with their employment.
25. We also heard that zero hours contracts worked
against maintaining standards as staff felt unable to raise issues
relating to quality of care, and even abuse, for fear of repercussions
against them from the employer. Similar concerns were to be found
in other industries. We were told how workers in the rail and
offshore sectors, without the security of a permanent job, were
reluctant to challenge unsafe working or turn down work, however
inconvenient the shift offered, in case doing so jeopardised future
offers of work. In these industries the insecure employment often
took the form of 'bogus self-employment' where employment intermediaries
such as payroll companies and umbrella companies are used to disguise
employment as self-employment and thus enable companies to avoid
paying employer's National Insurance Contributions and deny workers'
rights.[20] Furthermore,
umbrella companies have also been found to be paying part of a
worker's salary in the form of expenses even if those expenses
have not been incurred. This allows the umbrella company to reduce
the amount it needs to pay in employer's NIC. Where workers cannot
provide evidence of the expenses incurred they may be chased for
unpaid tax by HMRC.[21]
26. In the 2014 Budget the UK Government introduced
legislation "to prevent employment intermediaries being used
to avoid employment taxes by disguising employment as self-employment".[22]
It is disappointing that the clampdown did not extend to the problem
of denial of employee rights, despite this issue being included
when the measures to address employment intermediaries were initially
announced in the 2013 Autumn Statement.
27. Out of all of the forms of casual labour we discussed
in our Report, workers who were bogus self-employed had the least
rights. They were not entitled to receive sick pay, holiday pay
or the National Minimum Wage and were responsible for their own
taxation. The RMT union told us that workers were deliberately
being forced into self-employment:
It is subcontractors of subcontractors to oil
companies. They are not just engineers. They could be any trade
from scaffolders through painters to railroad platers to riggers.
They are told that the only means of employing them is through
self-employment. So they have to set up their own contract.[23]
28. Data from the Treasury showed that, in 2014,
around 300,000 workers in the construction sector were in bogus
self-employment, costing HMRC more than £380m,[24]
while ONS figures showed that 44% of all construction workers
were self-employed. Such widespread use of casual labour across
the UK, and in Scotland in particular, is alarming and unnecessary.
We heard cases where workers believed they were in full-time employment
only to discover through denial of rights, non-payment of bonuses
or sudden dismissal, they were in fact on a zero hours contract.
It is clear to us that, in the vast majority of cases, insecure
forms of employment such as zero hours contracts and bogus self-employment
exist to reduce costs for employers and to deny employment rights
to workers. It is our view that if it looks like employment, i.e.
there is no practical difference between the obligations put on
workers on insecure contracts and full-time employees, then those
workers must be treated as employees, with the security and rights
which come with that status.
29. Almost a year on from our inquiry into zero hours
contracts and other forms of insecure employment, we undertook
an inquiry into the collapse of the courier company City Link.
There are several disappointing aspects to the demise of this
company, not least the chaotic way that news that the company
was going into administration reached staff through reports in
the media on Christmas day.
30. But it is not just the timing of the news being
broken that was unfortunate. We heard that many of those responsible
for the delivery of City Link parcels were not permanent employees
but were instead self-employed, despite City Link insisting that
if they were to deliver parcels for them then their personal vans
must be painted in City Link livery and drivers must wear City
Link uniforms. As only employees are protected during a company
insolvency, self-employed City Link drivers will not be paid for
much of the work they did during December 2014. Many self-employed
drivers and small contractors have been left with significant
debts as a result of non-payment by City Link. This is wholly
unsatisfactory and is yet another area where those forced into
bogus self-employment suffer as a result of being stripped of
employment rights. Parliamentarians and the incoming Government
must ensure that the legislation underpinning the process of administration,
including legislation governing the conduct of directors and payment
for staff and suppliers is reviewed and updated so that workers
will not be left without protection in the future.
31. Our work over the 2010-15 Parliament has shown
that the use of casual labour is out of all proportion to what
is required and is creating a two-tier workforce. We urge employers
to make much greater use of permanent, part-time, fixed-term or
variable hours contracts which guarantee minimum hours and provide
workers with a degree of certainty. The incoming Government should
use all the levers at its disposal, including legislative change,
to effect a shift in culture. Parliamentarians, including those
on our successor Committee as well as others, should seek to hold
the Government, public and private sector employers, to account
on this important issue and help improve the conditions for thousands
of workers across the United Kingdom.
32. Our successors could start by looking at those
companies who make the greatest use of insecure employment, companies
such as Sports Direct. During the last months of this Parliament
we have asked, repeatedly and unsuccessfully, for Mike Ashley,
the owner of Sports Direct, to give evidence to us. We wanted
to ask Mr Ashley why 20,000 of the people who work for Sports
Direct are on zero hours contracts. We wanted to know why one
of his subsidiary companies, USC, failed, resulting in the loss
of 200 jobs, only to bought back from the administrators by Sports
Direct. We wanted to know why Sports Direct paid only £82
on average into employee pensions in 2014, compared to a FTSE
100 average of £2,920. We hope that our successor Committee,
without the time constraint of coming to the end of a Parliament,
will pursue Mr Ashley for answers on these important questions.
33. Mr Ashley's refusal to engage with us stands
in stark contrast to other business leaders. Jon Moulton, Better
Capital and David Smith, former CEO of City Link both gave oral
evidence for our inquiry into the closure of City Link and a number
senior figures in the construction industry, including Callum
Tuckett, Laing O'Rourke, Andrew Ridley-Barker, VINCI Construction
UK and Nick Pollard, Balfour Beatty, gave evidence to our blacklisting
inquiry. We commend their willingness to engage with the Committee
and would especially like to commend the willingness of Cullum
McAlpine, Sir Robert McAlpine, and Ian Kerr, Consulting Association,
to give evidence. We are disappointed that Mr Ashley was unwilling
to follow their lead.
Blacklisting
34. We discussed above the problems of insecure employment.
A great deal of our work during the course of this Parliament
has focused on workers who could not get employment at all-those
who had been 'blacklisted'. During this Parliament, we have published
four reports as part of a major inquiry into Blacklisting in Employment.
We launched our inquiry in June 2012, and published our first
interim Report Blacklisting in Employment on 16 April 2013.[25]
That Report focused specifically on the work of The Consulting
Association (TCA). We heard that over 3,000 workers were named
on a blacklist kept by the Consulting Association and used by
most of the major names in the construction industry. In that
Report we also considered the issue of compensation for those
workers who had been blacklisted.[26]
Through taking evidence from key witnesses under oath and
publishing several reports we have successfully raised awareness
of this issue, and placed crucial information into the public
domain. During our inquiry we identified many of the companies
who participated in blacklisting, set principles for the compensation
of those workers affected, and recommended changes to procurement
practices at both devolved and UK Government level.
35. Since the publication of that first Report, significant
progress has been made in highlighting and addressing issues relating
to blacklisting: the Information Commissioner's Office (ICO) has
launched its own investigation,[27]
many victims of blacklisting are bringing individual cases to
the High Court,[28] and
a new compensation scheme, the Construction Workers Compensation
Scheme (TCWCS), for blacklisted workers has been launched by eight
of the companies that used the services of TCA.[29]
36. We published our final Report in this inquiry
on 27 March 2015, and while it outlines the progress which has
been made, it raises many unanswered questions which still need
to be addressed, not least the allegation that the practice of
blacklisting is ongoing. We therefore called for the Government
to launch a public inquiry into blacklisting. Such an inquiry
must address the crimes of the past and look at best practice
for the future to ensure that the odious practice of blacklisting
is banished from the construction industry for good. Our efforts
to raise the profile of blacklisting and hold those responsible
to account is a good example of the important work that Parliament
can do to help those in society who have been marginalised and
let down by those in positions of trust and authority. We hope
that our successor Committee continues our pursuit of justice
for the victims of blacklisting.
Bedroom tax
37. The removal of the spare room subsidy, also known
as the bedroom tax or under occupation penalty, came into force
on 1 April 2013. Following its introduction, we conducted an extensive
inquiry to assess the impact of the bedroom tax in Scotland. We
held a number of evidence sessions across Scotland, including
in communities directly affected by the bedroom tax.[30]
In doing so, we exposed some of the worst effects and unintended
consequences of this policy. In a series of reports we called
upon the UK and Scottish Governments to mitigate the impact of
the bedroom tax in Scotland. Despite hearing evidence that Discretionary
Housing Payments (DHPs) would not be the most effective way of
mitigating the bedroom tax, once the Scottish Government had made
the decision to use DHPs in this way we urged both Governments
to expedite the necessary procedures, including passing Orders
that would allow the Scottish Government to raise the limit on
DHPs so that the effects of the bedroom tax in Scotland could
be mitigated completely.
38. We are pleased to be able to report that, on
9 December 2014, the Discretionary Housing Payments (Limit on
Total Expenditure) Revocation (Scotland) Order 2014 came into
force. The Order allows the Scottish Government to set the limit
for local authority DHP payments from 2014-15 onwards. We expect
the Scottish Government to hold local authorities, who are responsible
for administering DHPs, to account and ensure that funds allocated
to them are fully committed to mitigating the bedroom tax in their
areas. We also welcome the Smith Agreement's recommendation that
the Scottish Government should have the power to vary the housing
cost elements of Universal Credit including the under-occupancy
charge (i.e. the power to effectively remove the bedroom tax from
Scotland). We look forward to the implementation of the Smith
Agreement in full at the earliest opportunity.
39. We regret that the Scottish Government has not
taken forward our recommendations to ensure that any rental arrears
which occurred as a direct result of the bedroom tax should be
written off, and that any additional rent paid as a consequence
of the bedroom tax should be refunded. We are clear that the Scottish
Government has the funds required to take forward these recommendations.
16 Scottish Affairs Committee, Tenth Report of Session
2013-14, Zero hours contracts in Scotland: interim report, HC
654, 14 April 2014 Back
17
Written evidence submitted by the University and College Union
to the Committee's inquiry into zero hours contracts in Scotland Back
18
Available on the Committee's website. Back
19
Scottish Affairs Committee, Tenth Report of Session 2013-14, Zero hours contracts in Scotland: interim report,
HC 654, 14 April 2014, para 32 Back
20
Scottish Affairs Committee, Tenth Report of Session 2013-14, Zero hours contracts in Scotland: interim report,
HC 654, 14 April 2014, para 111-112 Back
21
BBC News, 'Abusive tax avoidance' affects temporary workers, 21
October 2012 Back
22
HM Government, Budget 2014, HC 1004 Back
23
Oral evidence taken before the Scottish Affairs Committee, HC
(2013-14) 654, Qq260-264 Back
24
www.building.co.uk, Osborne confirms clampdown on bogus self-employment,
19 March 2014 Back
25
Scottish Affairs Committee, Ninth Report of Session 2012-13, Blacklisting in employment: interim Report,
HC 1071 Back
26
Scottish Affairs Committee, Ninth Report of Session 2012-13, Blacklisting in employment: interim Report,
HC 1071, p.24 Back
27
See http://ico.org.uk/for_the_public/topic_specific_guides/construction_blacklist
Back
28
http://www.building.co.uk/blacklisting-high-court-cases-put-back-to-spring/5064382.article.
The full case is expected to take place later in 2015. Back
29
The scheme was formally launched on 4 July. Back
30
See paragraph 40 of this Report. Back
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