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Mr. McCartney: I thank my hon. Friend for giving way. I had not intended to take part in the debate, but I remember well the words that he quoted, having written them at 4 o’clock in the morning as part of the Warwick agreement. It is certainly true, as he said, that there was no guarantee about the directive, which was deficient in many ways, including its lack of protection for pensions. However, we signed up in good faith with the intention that if we did not reach agreement, we would tackle those abuses. The fact that we have not done that so far has led to the Bill. I hope that after
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today, we will get some serious negotiation done, and that those words will become a reality for thousands of workers.

Mr. McFadden: I thank my right hon. Friend. Serious discussion of the issues is exactly what is merited. We want an agreement that protects and treats fairly agency workers, but does not lead to fewer people having the opportunity to work, or stifle the ability of business to be flexible in how it manages demand.

We also want similar flexibility for our own labour market, as the directive would allow for labour markets with sets of institutions different from our own. That is an important point, and it is why the Government have engaged in discussions in recent weeks with both the unions and the CBI, with the aim of establishing a social partnership, akin in some ways to what we did on the minimum wage and the Low Pay Commission, to agree on some of the important details involved.

The Government continue to support the principle of equal treatment, but there are specific issues to be addressed, some of which have been raised today. They include determining what qualifying period or periods would be appropriate, and how equal treatment should be calculated. For example, should an individual be compared with a worker who would have been hired that day in the same circumstances, or with someone who had been doing the job for years and who might have very different experience and qualifications from those of the agency worker?

We have therefore proposed a process that brings together business and unions with an independent chairman to work through some of these issues. Although the parallel might not be exact—there are certain differences involved—the success of the Low Pay Commission demonstrates the strength of this approach in bringing durable, workable reform, so we have approached the CBI and the TUC to suggest an ad-hoc forum or commission, a body that would be tasked with making proposals concerning agency workers in the UK. That process would take account of the specific circumstances of the UK labour market and its institutions.

The approach that I have set out offers a way forward on what has been a contentious issue. At this stage, the process has not been agreed by all the parties concerned, but the Government’s point of view is that this is a constructive and positive suggestion to try to make progress in a way that offers greater protection while taking account of the specific conditions of the UK labour market, and that gives unions and business a voice in the outcome.

I want to deal with some of the specific issues raised in the Bill and to register some of our concerns about its contents. As I have pointed out, agency workers are already protected by a combination of general legislation, which gives them core rights, and specific legislation governing the conduct of their agencies. The Bill, as drafted, is silent on the issue of a qualifying period, and we must therefore assume that it would give agency workers equal pay as compared with a permanent comparable worker on day one. It is not clear what that would mean, but it could lead to some companies deciding not to do the work, outsourcing it or asking their existing work force to work longer hours.

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The issue of a qualifying period is one that we would expect to be discussed by the proposed agency workers commission. It is important when taking forward the issue of equal treatment to do so in a way that does not result in the unintended consequence of creating barriers to entry into the labour market for people who may find agency work a valuable route back into employment.

The Bill also appears to extend its coverage of agency workers to those placed by agencies in permanent posts. This goes beyond the draft EU directive, which applies only to temporary agency workers who have an ongoing relationship with the agency—for example, those who are paid by the agency and supplied to the hiring company. The Bill would take us into the field of regulating wages in mainstream permanent employment. Once an agency has placed a permanent employee in a company, the agency has no further contact and no further relationship with the worker. This is another issue about which we have concerns.

The Bill also touches on the difficult issue of establishing what equal treatment really means in terms of who is being compared with whom. It seeks to address this in a number of ways, including through the creation of a hypothetical comparator. It does not use the comparator contained in the current draft of the agency workers directive, however. I acknowledge that this is a difficult and sensitive issue, in terms of achieving clarity and creating a mechanism for enforcement. This is another example of the kind of issue that the Government feel could usefully be worked through in the commission that we have proposed.

The Bill suggests that, if there were “no real comparable direct worker”, a “tribunal” could look at a wide range of circumstances to establish whether there was a hypothetical comparator. This needs careful examination, as it could encourage an increase in complex and costly litigation. Enforcement needs to be considered carefully, particularly when there is no readily available comparator, lest we establish a regime that proves over-complex and bureaucratic to operate.

We have a very active agenda on the issue of preventing abuses at work.

Philip Davies: I asked the Minister earlier whether he agreed with the CBI’s assessment that the Bill, as drafted, could lead to 250,000 job losses. He replied that that was the CBI’s figure, not the Government’s. I want to pin him down on this matter. Will he tell us what the Government’s assessment is of the number of job losses that the Bill would cause?

Mr. McFadden: Whether or not such a regime would have an adverse effect on employment would depend on the issues that I have just mentioned. It would depend on how the comparators were measured, on what the qualifying period or periods might be, and on precisely how the regime would operate.

On the wider agenda of preventing abuses at work, we are working closely with trade unions, business and the enforcement agencies. I appreciate the genuine concerns of my hon. Friend the Member for Ellesmere Port and Neston and the supporters of the Bill who are present today. However, given the Government’s proposals that I have set out today on how we wish to take this issue forward, and our reservations about
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some of the specifics in the Bill, the Government cannot support it on Second Reading. However, we are happy to maintain a dialogue with my hon. Friend about these issues and we will not oppose his Bill at this stage. We will work actively to take forward the proposal for a commission on agency workers that I have outlined. We believe that that represents a positive way forward on what has been a difficult issue. I hope that hon. Members on both sides of the House will be united in the aims of stamping out abuse of vulnerable workers—whether directly employed or agency workers—maintaining opportunity and choice for employees to get work, and ensuring that the British economy remains flexible and successful, not just today but well into the future.

10.46 am

Lorely Burt (Solihull) (LD): I preface my brief comments with two points. First, I apologise to the House because I cannot stay to the end of the debate. I have to leave early for a hospital appointment that I have already cancelled once because of parliamentary business. Secondly, I want to be brief because the second item of business—the Leasehold Reform Bill, which is to be presented by my hon. Friend the Member for North Southwark and Bermondsey (Simon Hughes)—will be hugely important in strengthening the rights of leaseholders, and the Government have indicated that they might not oppose it.

I have no argument with the intention of the Temporary and Agency Workers (Equal Treatment) Bill to protect vulnerable agency workers from being exploited by unscrupulous agencies. However, the Bill scoops all agency and temporary workers into the same net. Most agencies are reputable and care for their workers; otherwise, people would not continue to work for them. The net also scoops up professional contractors who use agencies and who are paid a premium to lend their expertise for a specific time. They could suffer a pay loss if the Bill were implemented. Indeed, my hon. Friend the Member for Teignbridge (Richard Younger-Ross) has expressed his fears about that. In his previous life, he worked as an architectural technician and he benefited from agency work and from receiving premium payments.

Companies use agencies because they need flexibility to cope with fluctuations in demand. Six per cent. of the work force are temporary or agency workers, and the arrangements can suit them, too. The TUC reports that 50 per cent. of temporary and agency workers choose this form of working because it gives them flexibility. If we were to give agency workers the same rights as employees, we would kill this market stone dead because it would remove the reason why these workers exist. Also, if there were an economic downturn, as many people fear, a lack of flexibility to cope with changing business needs could spell the end of many more jobs than those of the temporary and agency workers alone.

There are injustices in this market, and they must be tackled. Government statistics prove that, on average, temporary workers earn 23 per cent. less than the average for the whole work force, though that is due at least in part to the concentration of temporary workers at the unskilled end of the labour market. I feel particularly that it is not right that agency and temporary workers should be kept on contracts for long periods when they are really employees in all but name.

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The CBI, the Federation of Small Businesses, the Institute of Directors and the British Chambers of Commerce seem willing to help tackle the problem by considering the possibility of a period after which temporary or agency workers would be entitled to full equal rights, as outlined in the Bill. They seem to favour a period of 12 months, as it would tie in with other aspects of employment legislation. As we have heard, the CBI says that its members would sit on an agency workers commission. The commission appears to be a good way forward.

In relation to unscrupulous agencies that flout existing law, the problem is a need not so much for new legislation as for enforcement of the legislation that we already have. How many new laws will it take before the Government realise that they will not stop bad behaviour just by making it illegal, but must increase the certainty of getting caught? I read recently that the average employer can expect an enforcement visit from a Government minimum wage inspector once every 287 years. The Minister’s earlier assertion that the Government are enforcing the minimum wage looks hollow.

Mr. McFadden: Does the hon. Lady agree that the enforcement agencies should respond to complaints rather than touring the country inspecting by rota businesses where there may be no abuses at all? Her figures for how often a perfectly good employer can expect a visit do not imply the best use of the enforcement agencies’ time. The agencies could be responding to complaints from people who say that they are not receiving the minimum wage.

Lorely Burt: I agree that the Government must investigate all complaints. However, it is far short of the mark to imply that companies that the Government have not investigated must be good employers. I appreciate that the Government have limited resources, but they should at least put the same effort into enforcing existing law as they do into creating new ones.

Richard Younger-Ross: Does my hon. Friend accept that temporary workers often lose out in industries such as construction, where companies short-cut health and safety regulations, and that the number of accidents on building sites is increasing in direct proportion to staff cuts at the Health and Safety Executive? In some cases, we need agencies to go around enforcing legislation, because if they do not, there will be more accidents at work.

Lorely Burt: I thank my hon. Friend for a valuable intervention. I agree totally.

I spoke to the citizens advice bureaux yesterday. They would like the enforcement commission to enforce action on abuses of existing legislation, rather as Her Majesty’s Revenue and Customs enforces the minimum wage. I am glad to hear from the Minister’s remarks that the Government have been discussing enforcement with the CABs, and I hope that he will say whether the Government support an enforcement commission of that sort.

Agency workers have contracts, but those contracts are with the agencies. It is totally impractical to have to produce a new and different set of terms and conditions every time a worker goes to work for a
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different company for a few days. That would result in huge additional bureaucracy that neither agencies nor companies, especially small companies, could afford. As has been mentioned, agency workers already enjoy many of the same rights as employed workers: four weeks’ paid holiday, rest breaks, the national minimum wage, statutory paternity and maternity pay and statutory sick pay if they have worked for the agency for more than three months.

Mr. Evans: Was the hon. Lady as staggered as I to read in The Times on 4 February that agency nurses are paid as much as £120 an hour? It is quite staggering if that is the case. We should really be fighting for the rights of ordinary nurses who work full time, rather than for the others.

Lorely Burt: I thank the hon. Gentleman for that most interesting intervention. I am not sure what side he is arguing on, but it was interesting nevertheless.

The only rights that agency workers do not enjoy are those on which the flexibility of the agency model depends. Full-time staff rarely get full employment rights until they complete a probationary period of six months. The point has been made that if temporary workers receive full rights from day one, they will have more rights than permanent staff.

There is one area, however, in which the Bill could be useful. Some 38 per cent. of agency staff are in place for more than six months. That clearly needs to be tackled. Where temporary and agency workers are employees in all but name, they should be entitled to full employment equality after a certain period. Employers’ organisations acknowledge that. The Liberal Democrats would welcome negotiations between the Government, trade unions and the industry to find a workable solution to stop that form of exploitation.

As we have heard this morning, the olive branch is being held out. The Liberal Democrats would be happy to support a vote for the closure motion and a vote for Second Reading, if one is called. However, we will oppose the Bill on Third Reading unless it comes back substantially amended after negotiations with employers, and particularly with bodies representing the employment agency industry.

10. 56 am

Mr. Nigel Evans (Ribble Valley) (Con): My contribution to this important debate will be short. I congratulate the hon. Member for Ellesmere Port and Neston (Andrew Miller) on being successful with a private Member’s Bill. It is not easy. He is clearly impassioned about the issue, because it is not the first time that such a Bill has come before the House. The Government were opposed to it then, and they appear to be opposed to it now, although they have dreamed up a commission to look into all the implications not only of the Bill but of giving equal treatment to agency workers.

Philip Davies: Another review.

Mr. Evans: My hon. Friend is being cynical. I think that it is important that we find out all the unintended consequences of any action that the Government might
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take, even when those actions are well intended, as the Bill clearly is. The Bill’s intention is to ensure that the human rights of workers in this country are properly respected, and we must all applaud that, but it is the unintended consequences of well-intended legislation that puts the greatest fear in me. A lot of the legislation that passes through this place is intended to improve people’s quality of life, but when the unintended consequences kick in, we often find that it ends up doing quite the opposite.

If we are to believe the CBI, the Bill would result in the loss of 250,000 jobs. Clearly, the hon. Member for Ellesmere Port and Neston does not want to introduce legislation that will cause the loss of a quarter of a million jobs, but when the CBI says that, we must take it on board. It is a ball-park figure, but I assume that it is based on the implications of the Bill. The Minister said in response to several interventions that that figure is not his but the CBI’s, but trying to squeeze out information on how many jobs the Government estimate would be lost if the Bill as it stands became an Act was beyond us. Quite frankly, we failed completely to get the Minister to answer that question.

Philip Davies: My hon. Friend is absolutely right—it was striking that the Minister was not prepared to come up with a figure—but does he agree that from the tenor of the Minister’s remarks, it was perfectly clear that the Government believe that the Bill as it stands would lead to at least some job losses?

Mr. Evans: That is the impression I got. The Minister had the opportunity to say that although the CBI estimates that 250,000 jobs would be lost, the Government do not believe that there would be any job losses. When I asked the hon. Member for Ellesmere Port and Neston what he thought the Bill’s impact on business would be, he said that he thought it would be positive—perhaps even lead to the creation of jobs. There is clearly a wide spectrum of views, and I would have hoped that the Government had done at least some research to find out what the impact would be.

We want to ensure that we have a competitive and flexible labour market in this country. We want to ensure that people have jobs and good conditions in those jobs. I am an employer, although clearly I do not have hands-on management of that business in Swansea—my sister does all that. I know that a business man who employs people would have to be insane to maltreat his employees. A business wants to get the best out of its employees, and that is not achieved by maltreating those employees.

Philip Davies: My hon. Friend makes a powerful point, which goes to the nub of Government Members’ misunderstanding of running a business. They seem to think that it is a case of either making a profit, or looking after one’s staff. In my experience, the most successful companies in the world have two things in common: they look after their staff and they look after their customers. Looking after staff and customers is the way to guarantee success.

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