Before the urgent question, I had just set out some of the ways in which the present Government are enforcing the national minimum wage. It appears, at least on the face of it, to be a system that would benefit those on low pay, but, all is not as it seems.
Not content with the introduction of a national minimum wage, pressure groups began to press for what they termed a “living wage”, and in April this year a national living wage was actually introduced. As far as I can see, however, what it amounts to is the creation of an extra tier of the national minimum wage, payable to those aged over 25. At £7.20 an hour, it represents a 50p increase on the minimum wage.
The living wage was described as a pay rise for over a million low-paid workers across the UK, many of whom would be in low-income households. While that is true, it is worth pointing out that the belief that when a minimum wage is increased the benefit goes to all those in the lowest income groups is far from the truth. In reality, 44% of low-paid workers are in the top half of the household income distribution, because, in many cases, their spouses are earning much more. The fact that one person is on the minimum wage does not mean that the household income as a whole is very low.
Let me return to the question of definitions. Those who are defined as workers are already covered by the minimum wage legislation. That applies to everyone, whether they are working as apprentices or not. On
The crucial question is this: what is the position of volunteers? They work, surely, and is an intern not a volunteer? That question goes to the heart of the dilemma that faces my hon. Friend the Member for Elmet and Rothwell. After all, no one forces anyone to take up a position as an intern, so by definition they are all volunteers. At present, section 44 of the National Minimum Wage Act 1998 excludes voluntary workers from the national minimum wage. On
“it does not cover volunteering in non-charitable commercial enterprises. To include that would undermine the Bill, and would go against the principle that volunteering should be for social good rather than a form of cheap labour for commercial profit.”—[Official Report,
A company can become liable to pay the national minimum wage if the individual receives any payment beyond expenses or benefits in kind. That could include, for example, free tickets to a show if the individual is volunteering in that sector, or a festival or concert in the case of an arts charity. It is clear that the introduction of the national minimum wage has resulted in a raft of new rules and regulations that businesses must be conscious of and abide by. They must be aware of their responsibilities even towards individuals who are, on the face of it, just volunteers. As always, it is relatively easy for big businesses with large human resources departments to comply, but this Bill is intended to cover all employers, large and small. Companies need to be very aware of the responsibilities towards individuals who volunteer.
One important issue for a company to determine is the status of those who are providing services for them. Ultimately, it is the nature of the actual relationship between a worker and an employer that defines whether someone is a worker or not. This is the key point, and my hon. Friend the Member for Elmet and Rothwell skated over it when introducing the Bill. One can perfectly well envisage a situation where an individual is nominally termed an “intern” but in reality is a worker. In fact, one does not have to imagine anything, because fortunately there is case law on this point, which I will come to shortly. In such a situation a person would not need to rely on any new provisions contained in this Bill; they would simply be able to rely on the existing national minimum wage legislation, and could seek help and guidance from organisations such as ACAS. It is worth putting on record that reporting an alleged breach of the legislation is very simple. Any employee, volunteer or intern who believes that an employer is not complying with the minimum wage legislation and who wishes to report a problem with working hours or the minimum wage can do so by simply filling in a pay and workers’ rights complaint form, which is available on the Government’s website and can then be emailed to HMRC.
Let us be clear about one thing: the National Minimum Wage Act 1998 contains no reference to interns or internships. Even under the Labour Government of the day, it was clearly the intention that someone doing work experience—or, if we prefer the term, an internship—should not be entitled to the national minimum wage.
As I have said, we are fortunate that there is case law on situations where an individual is called an intern but where in reality a contractual relationship exists between them and the employer. In 2009, Nicola Vetta brought a case against a company called London Dreams Motion Pictures Ltd. It was heard at Reading employment tribunal on
“full-time and our main assistant”.
In another complimentary email from the respondents to the claimant they said:
“We are very surprised that you have dived right into the action and within weeks become a key member of the team.”
Other emails were referred to at the hearing, including one in which it was said that Ms Vetta was running things and assembling a team. After considering all the evidence, the tribunal held that, despite the respondents’ defence that Nicola was not an employee and was merely engaged on an expenses-only basis, in reality she was nevertheless entitled to be paid the minimum wage as she was considered to be a worker. She was awarded £2,174.53 in unlawful deductions of wages, plus accrued holiday pay of £220.91.
This could very easily have been one of the internships my hon. Friend the Member for Elmet and Rothwell has been talking about this morning. There are many such cases, but I will touch on one other.
My hon. Friend has given an interesting account of an industrial tribunal case, illustrating what we do not want to see happening. My grave concern about the Bill is that it would prevent many of our young people from getting valuable experience.
I fear that if the Bill becomes law there is a danger that what now appears to be the settled law as laid down by these cases will be thrown into doubt and there might be a whole raft of new cases with new definitions to be challenged in the courts. As I will say later, although this Bill refers to “employment practice”—a new term to me, which I will come on to—there is no clear definition, as far as I can see, of what is meant by that, and I anticipate it will have to be tested in the courts and in industrial tribunals.
Let me turn to the case of Hudson against TPG Web Publishing Ltd in 2011. It was also held in this case that the claimant was a worker. Keri Hudson worked eight hours a day between 10 am and 6 pm for a publishing company and supervised a team on a website. The employer had considered paying her but decided not to. The tribunal concluded that she was a worker with a contractual relationship existing between herself and the employer and was therefore entitled to be paid the minimum wage. The reneging on the payment was a key factor because it demonstrated that the respondent recognised that the position at least could be a paid position.
At that time the National Union of Journalists said of the judgment:
“This sends a clear message to media companies that if they treat interns like cheap labour, the NUJ will take you through the courts.”
It is clear from this case that the issue of interns who are actually carrying out work has been tested in industrial tribunals, which have found that if someone is working, they are liable to paid. Unions have, to be fair to them, taken up this cause and are alert to the problem, and in appropriate instances take cases to a tribunal.
I am listening carefully to my hon. Friend, and this draws into comments I made, as do his opening comments about the legalities around national minimum wage law. I said at the opening of my speech that we still have people not being paid when they should be. Does my hon. Friend feel that people have the courage to go forward, even with union backing, or might they be worried about the effect it could have on the future of that industry?
I rather suspect that any individual who brings a case is more concerned about their own contractual position than the wider industry. They might be concerned about their position within the industry, and I wonder whether that is what my hon. Friend is driving at. But I imagine the industry would respect the judgments of tribunals and accept that an individual who had the confidence to challenge an employer on the interpretation of an Act of Parliament and was able to demonstrate to the satisfaction of the tribunal that they were on the right side of that would be someone employers should be looking to engage, because it would be someone who had the confidence, willingness and ability to take on a larger employer. If they manage to win that case, I would have thought that would only enhance their opportunity of being given a job.
My hon. Friend is entitled to his view, but as a former employer myself that is the view I would take—although others might come to a different view.
In the Hudson case, as in the Vetta case, the tribunal determined that essentially this was not an internship, but was a job for which Ms Hudson should be paid, and it awarded her unpaid wages and holiday pay. I submit that on the basis of the findings in those cases the Bill offers nothing new to protect workers. If someone is actually working despite the fact that they might be called an intern, they are covered.
We should consider how many people would be covered by this Bill, even if it were to be of any value and brought into law. A written parliamentary question of
“The Government has no current plans to quantify the number of paid and unpaid interns. There is no legal definition of an intern, but all those who qualify as ‘workers’ are entitled to the National Minimum Wage and National Living Wage.”
Let us reflect for a moment on why the Government were unable to provide a more specific answer to that relatively straightforward question. I submit that it would entail reporting by businesses, small and large, on the details of the thousands of interns who are employed in offices, shops and factories right across this country. Some companies would have hundreds in the course of a year and, given the nature of internships, which can often be for short periods of time—sometimes for a week or two weeks—can the House imagine the practical difficulties in trying to ascertain an accurate number?
In 2010, a briefing note on interns and the national minimum wage was sent to the then employment relations Minister, Ed Davey, and the then universities Minister, David Willetts. Sadly, that briefing note has been heavily redacted. I wish it had not been, because it would have been very interesting to read the whole document. Perhaps we could speculate why it was so heavily redacted; the House will be pleased to know that I will not so speculate. The briefing note, which was released on
“No single data source can provide an accurate estimate of the number of paid or unpaid internships. Unpaid workers are particularly hard to capture in national surveys as they are not on the PAYE system. Given the paucity of data, we have had to construct an estimate for the total number of interns based heavily on reports from the Chartered Institute of Personnel and Development (CIPD), combined with a number of other assumptions. This estimate is 50-70,000 internships, of which 10-15,000 are unpaid, but due to data limitations any figures should be treated as purely indicative.”
The Sutton Trust estimated in November 2014 that 31% of graduate interns in this country had reported working for no pay. Those data were based on the Higher Education Statistics Agency’s leavers survey of 2012-13. More recently, the Low Pay Commission said in spring this year regarding non-payment of the national minimum wage:
“This year we received fewer responses from stakeholders on this issue. While this in itself could be interpreted as evidence of an improving situation, the feedback we have received from stakeholders who have responded indicated that the issue remains live.”
To be fair, the report also referred to discussions with unions and expressed concerns about non-payment of the minimum wage in the arts and entertainment industry in particular. Clearly, however, there are real difficulties in quantifying the size of the problem. Although we do not know whether it is getting better or worse, if fewer stakeholders are contacting the Low Pay Commission about concerns over unpaid internships, maybe it is not such a critical concern to people.
My hon. Friend the Member for Elmet and Rothwell posted on his website a call for evidence from the people of Yorkshire who had had experiences of unpaid internships. In his brief opening remarks, he was unable to expand on the sort of response he had to that call for evidence. I commend him for doing his research, but it seems to me that it would have been better to ask for the evidence first and then try to look for a solution only if a problem could be identified. I am not convinced that the problem is exactly what my hon. Friend thinks it is. Even if there is a problem, I am absolutely certain that this Bill will not solve it. In my view, it will create more problems.
To put my hon. Friend’s mind at rest, the problem was identified many years ago, and some of the examples that I received were used in my speech today.
I am grateful for my hon. Friend’s report of that. I have been completely consistent in my approach to the proposed legislation. I voted against the previous Bill when it was put to a Division a couple of years ago, so he and I have both been consistent.
As it happens, I was an employer when the national minimum wage legislation was introduced. At the time, I suspect I was employing about 30 or 40 people, so I know from first-hand experience about the impact that it had, not just on me but on many of my clients, which were small businesses. It undoubtedly took up some staff time; it was new legislation and we had to look at how to comply with it. To be fair, although rogue employers will do all they can to break the rules—that will always be the case—the truth is that most businesses and most small employers bend over backwards to try to comply with laws that emanate from this place. Although some extra administration was involved, I do not want to over-egg the pudding; it did not take up a huge amount of time or dominate our practice, but we did have to deal with it.
The biggest problem was not so much the administration but the economic costs of the minimum wage. I refer not so much to those who were not covered by the legislation—in our small practice, perhaps only one or two employees felt any benefit initially from the imposition of the minimum wage—but to the knock-on effect that it had on wage differentials. That was the economic problem for small businesses. If, for example, the salary of the lowest-paid worker—say, the office junior—is increased to the same level as, say, the junior typists, they can legitimately and understandably claim that in order to restore the pay differential, they should have a pay increase. That has a knock-on effect on the next grade up, and so on. The ripple effect of increasing the wages at one level can soon be felt much higher up the pay grade.
Turning to the engagement of additional staff, the fact is that if an employer has work that needs doing, they will engage a new member of staff. That may be part-time, of course—there might not be enough work to fill a full-time role, but the employer will engage either a part-time or full-time staff member. I accept that there might be unscrupulous employers who, seeing a short-term amount of work that needs doing, might seek to engage an unpaid intern to do that work. As I demonstrated earlier, however, my view—which, to be fair, is backed up by cases—is that that situation would already be covered if the person involved could demonstrate that they were carrying out work and were entitled to be paid the national minimum wage. So who would be covered by my hon. Friend’s Bill? People who are doing work are already covered, so the only other people who could be covered are those who are not working: the ones who are watching. Is my hon. Friend really suggesting that the national minimum wage should be paid to people who are simply watching someone else work?
I shall let hon. Members into a little secret. What goes on in this Chamber might be considered a spectator sport, and quite rightly, but I take the view that running a small business is not. When I was running a small business, I could not afford to pay people to come and watch me work. I did not mind paying them if they were carrying out work, but I could not afford to pay them simply to come and watch. I did not mind them coming to do work experience, and I got lots of requests—I still do, as a Member of Parliament—from people asking to come and spend time with me. I said, “Of course, there’s no problem. I will chat to you and I will give you advice.” But I could not pay them to do that. The reality is that an employer, and particularly a small business, cannot afford to pay people who want to sit and watch and then simply walk away having added no value whatever to the business.
Let us ask ourselves what determines a wage on the open market. It is an essential truth that work should be compensated according to productivity. A wage is the price at which a worker is prepared to sell his or her labour; the wage is the balance between what the employer is prepared to pay and at what level the labourer is prepared to sell. The employer will of course take into account the productivity of the labourer, and the labourer will consider how much they value themselves working for that employer. They will also take into account the experience of working there and the working environment. Someone who is prepared to spend time going on work experience—or an unpaid internship, if that is what we want to call it—is demonstrating that they value the experience of just being there and the contacts that they will make while they are there. In their eyes, those considerations cancel out the need for any monetary compensation. I believe that it is absolutely right that an individual should be free to decide for themselves the value of their own labour.
So what would happen if that basic arrangement were interfered with? What would happen if the law said—as I believe would be the case if the Bill became law—that an employer would have to pay to be watched? The obvious conclusion is that a black market would develop, as happens in any market where the price of a product or commodity is set at an artificially high level, higher than the genuine market level. If someone wants to do a few weeks’ work experience—whether it is called an internship or not—without being paid, the law should not prevent that from happening.
Let me deal briefly with the claim that unscrupulous employers are somehow exploiting a loophole. It seems to me that there is much more likelihood of an unscrupulous employer exploiting an individual who is being paid, because they will then expect a return on their payment. If someone is not being paid at all, it is surely far more difficult to exploit them and far more likely that that intern doing work experience would simply walk away.
I want to look in detail at the problems in the Bill. The first problem revolves around the definition in clause 1, which states:
“For the purposes of this Act, a workplace internship is an employment practice in which a person (“the intern”)— undertakes regular work or provides regular services in the United Kingdom for—
(i) another person;
(ii) a company;
(iii) a limited liability partnership;
(iv) a public authority;
At the moment, the word “intern” has no legal definition. The official Government website, gov.uk, states:
“Internships are sometimes understood to be positions requiring a higher level of qualification than other forms of work experience, and are associated with gaining experience for a professional career.”
The key term in clause 1 is “employment practice”. Those two words are central to what I would call the obfuscation at the heart of the Bill. What is an employment practice? I venture to suggest that it is actually an employment contract. In other words, this clause is attempting to cover every employment contract in just about every conceivable working environment. Perhaps my hon. Friend would agree, and say that that is exactly what he is trying to do. Perhaps he is trying to make this so watertight and all-encompassing that absolutely no one could escape from it, but let us consider for a moment the problems that could arise from that.
Let us take the example of someone who is setting up a gardening business and regularly volunteering their time to maintain the garden of, say, an elderly neighbour. For the gardener, who wants to work, this is an opportunity not only to help the neighbour but to demonstrate to the neighbourhood that they are capable of the job, which could lead to paid work. Clause 1(b) states:
“(b) the purpose of the employment practice is—
(i) that the intern meets learning objectives or gains experience of working for the employer listed in section 1(a);
(ii) to provide practical experience in an occupation or profession.”
We know from clause 1(a) that the intern could be working for a sole individual, which would cover the example of someone wanting to work for their neighbour. In that scenario, could the neighbour become liable to pay the national minimum wage? To me, that seems very likely. I submit that that would be an unintended consequence that could result in a financial cost when the person was simply trying to do someone a favour.
Nowhere in the Bill is there a definition of regular work or regular services, a point made earlier by my hon. Friend Philip Davies. While we are fortunate that the Bill comes with some explanatory notes, they do not give any further clues as to what actually amounts to regular work or regular services. When something is not specifically defined, there is the potential, as pointed out by my hon. Friend Mark Pawsey in an earlier intervention, not only for further references being necessary in order for an industrial tribunal to clarify the situation, but for terms to be widely construed. If someone is called in to do some filing in an office every Tuesday, is that regular? If a volunteer assists with a monthly live event, is that regular? It clearly means that something happens more than once, but there is no clear guidance.
I suspect that what would happen with the Bill is that the term “internship”, which has been adopted and is widely used and which this Bill seeks to outlaw, will be rapidly replaced by another term. People will try to get around the legislation by using another term—perhaps “work shadowing”. It may be that work shadowing is already covered by the Bill—we would have to see—but if someone has not been promised future work, that situation could be caught by the Bill. I would therefore submit that the Bill’s scope is too wide.
Clause 3 attempts to narrow that scope by setting out some exclusions. It excludes students who are required to do work experience as part of their course. In other words, the Bill recognises that work experience, when part of a wider course of study, does not have to be paid. To be fair, my hon. Friend the Member for Elmet and Rothwell touched on that in his remarks, but I did not intervene because he made it clear that he was not going to take any more interventions. However, the Bill’s true effect will be to discriminate against precisely those who have been told this morning that it seeks to help. If someone is lucky enough to go to college or university, the Bill says that it is fine for them to go on a placement or have 12 months’ work experience. If someone is not that lucky and just wants the opportunity to see what workplace life is like, the Bill states that an employer must pay them. That cannot be right. I am unsure whether that has been thought through by the Bill’s promoter, but it seems that that is exactly what would happen if the Bill became law.
The Bill also excludes those “of compulsory school age”, who are excluded from the National Minimum Wage Act 1998 anyway; those who are doing apprenticeships; and those otherwise excluded under devolved powers. However, I now want to comment on clause 3(1)(d). Clause 3 states:
“For the purposes of this Act, section 2 shall not apply if the person is—
(a) a student at a higher or further education institution…
(b) of compulsory school age;
(c) undertaking an approved English apprenticeship…
(d) meets the terms of a definition set out in regulations made by the Secretary of State or, as the case may be, the relevant Scottish, Welsh or Northern Ireland Ministers.”
Taken together, those words state that
“section 2 shall not apply if the person is-
… meets the terms of a definition”.
I gently suggest to my hon. Friend that there must be some words missing from clause 3(1)(d)—probably “someone who”. I think it should say that section 2 “shall not apply if the person is—someone who meets the terms of a definition”. It does not make sense as it stands.
The clause also runs the risk of different regulations being made in different parts of this United Kingdom. I hope that my hon. Friend will say that I have missed something and that that is not the case, but the clause seems to suggest that if regulations are made by the Secretary of State in this place or by relevant Ministers in the devolved Administrations, different classes of people would be excluded in different parts of the United Kingdom. Is that the case? Perhaps my hon. Friend will reflect on that and comment on it when he winds up.
I am conscious of the fact that many other Members wish to speak , but I want to talk about the many other people who have looked into this problem. In 2011, the policy group Perspective produced a paper called “Arguing for the introduction of paid internships”, detailing international comparisons of the action taken on this issue. It referred to the 2010 report from the International Labour Office “Global Employment Trends for Youth”, which looked at international comparisons. I do not know whether my hon. Friend, in drawing up the Bill, has examined the situation in other countries and whether the problem he has identified has been solved anywhere else in the world—it may well have been. Some countries, such as Canada and South Korea, have committed to funding internships in key sectors, which may be one way of doing this; we could simply throw Government money at it and say, “We will pay for people who need work experience.” South Korea extended its state-supported youth internship programme and introduced wage subsidies for small and medium-sized enterprises that engaged interns on regular contracts at the conclusion of their internship. I would not want to go down that road, but it has happened in other countries.
More interestingly, the Institute of Economic Affairs, perhaps spurred into action by the publication of my hon. Friend’s Bill, published a discussion paper in August entitled “And how much do you earn?”. One of its conclusions was that the current minimum wage legislation “should be simplified”, and I strongly support that. If this Bill were to be amended in Committee and to go down that road, there would be a lot of merit in that approach. The authors of that paper, Ryan Bourne and J. R. Shackleton, acknowledged that the national minimum wage has “broad public support”, but they said that
“the introduction of the National Living Wage threatens to lead to a populist arms race in terms of statutory minimum pay rates.”
The paper made a number of suggestions, including reducing the number of bands to just two, one for people 18 and over and the other for people 25 and over. It also suggested that the Government should:
“re-emphasise the independence of the Low Pay Commission, allowing it to continue to recommend changes to both rates in the new system according to the best evidence available on the pay-employment trade-off. This is particularly important given the pressure there will be to continue increasing wage rates even in economic recessions.”
In conclusion, the website Simple Politics calls this Bill “The ‘pay interns’ Bill”. I would argue that on closer inspection it is not that, but “The making work experience unaffordable Bill”. Even worse, it could be called “The denying young people opportunities Bill”. The growth in the number of unpaid internships has arisen as a consequence of the minimum wage legislation. I said earlier that the term “internship” was something I had not previously come across; it has arisen only since the arrival on the scene of the minimum wage, and with it has come the problem of elevating people who are doing work experience to the status of workers.
It was never the intention—the Minister actually said this, in terms—that businesses would have to pay wages to people who were not actually working, but simply experiencing the workplace. The most likely result, if the Bill became law, would be a reduction in the number of opportunities available to young people. Why? Perhaps because the law recognises that work placements do not have the same status as actual work. If an intern is actually working, it is already illegal not to pay them the national minimum wage; that is in the national minimum wage legislation, which Her Majesty’s Revenue and Customs is enforcing. The Bill is simply unnecessary.
I am interested in what my hon. Friend says. Will he talk a bit about the status of voluntary work? Some people want to volunteer, and lots of charities have business arms; there are charity shops and so on, which have a mix of employee and volunteer help.
Order. We do not want to hear too much on that, because Mr Nuttall is coming to the conclusion of his speech. Do not worry: five other Members wish to speak. I want other Members to take part in the debate. I would not want to close the debate down too quickly.
I am grateful to you, Mr Deputy Speaker, and I shall deal with the intervention fairly briefly. My hon. Friend Mr Rees-Mogg raises an important point, and I apologise for not going into as much detail on it as I perhaps should have. I said in an intervention that the Bill nowhere refers to volunteers. It is silent on the issue of volunteers. When I pressed my hon. Friend the Member for Elmet and Rothwell on that, he rather bizarrely started talking about the exclusions—the people to whom the Bill does not apply—but it does not say “a volunteer” anywhere in the list of exclusions. I think that volunteers are included in the Bill by definition, unless they are covered by the catch-all, get-out-of-jail-free card in clause 3(1)(d), to which I referred earlier. It sets out that a person is excluded under the Bill if they meet
“the terms of a definition set out in regulations”.
It may be that, for some reason unknown to me, my hon. Friend thought, “I’ll leave this problem to the Minister to solve”—and there is a real problem in the Bill: what do we do with volunteers? I will not attempt to go down that path and sort out the thicket of problems that arise from the point made by my hon. Friend the Member for North East Somerset. There is a genuine problem with those who do a mix of things—who sometimes volunteer, and sometimes work in a shop, or a charity’s commercial arm. That point is not clear. It is quite likely that those sorts of issues will finish up in the courts and before the industrial tribunals. It will be a bun fight, and a money-making scheme for lawyers. [Interruption.] My hon. Friend Victoria Atkins is positively delighted by that.
I entirely accept that my hon. Friend the Member for Elmet and Rothwell is well intentioned in bringing forward the Bill. I have tried to draw out some of the genuine problems that I see with it, and I hope that on considering the arguments advanced against it, he will withdraw it. I will continue to oppose the Bill, and I urge the House to do the same.
It is always a pleasure to follow my hon. Friend Mr Nuttall.
I commend my hon. Friend Alec Shelbrooke, my fellow west Yorkshire Member of Parliament, for bringing forward this Bill. As we all know, he is a very decent man. As my hon. Friend the Member for Bury North pointed out, he made a promise to his constituents and, as a decent, honourable man, he is honouring that promise. Nobody in this place should criticise him for doing that. It is what we have come to expect from him. Having said that, I do not think it was a particularly good promise to have made or to be fulfilling, although I admire him for following it through. I do not support the Bill but I do support—
I am sorry to intervene on my hon. Friend’s speech at such an early stage, but last year we established a tradition of congratulating the Chairman of Ways and Means on the brilliant way in which he carried out the lottery to ensure that our hon. Friend Alec Shelbrooke came third in the ballot and had this Bill to introduce. Perhaps my hon. Friend would like to say a few words on that subject.
Let us assume that he does not need to, and we will get the lottery done shortly.
May I offer a piece of advice to my hon. Friend, who I know is interested in making money in other ventures? Perhaps next time he would like to seek advice from the Deputy Speaker. I understand that I was one of the few people in the room when the ballot was drawn. Mr Deputy Speaker and I must be a lucky charm for that, so if my hon. Friend is looking for advice for his lottery numbers—
Being in the room has absolutely nothing to do with how the ballot is drawn. I put that on the record before anyone thinks that that is the way forward. Let us stick to the debate in hand, rather than the comments from various parts of the Chamber.
I am delighted to hear that the ballot is not a fix, but I never thought it was.
We all support the ambition of my hon. Friend the Member for Elmet and Rothwell to see greater social mobility, and I know that that is what lies behind the Bill. That is the motivation that brings my hon. Friend to this place. The problem that I have, that some of my hon. Friends and some Opposition Members have—[Interruption.] There is only one Opposition Member in the Chamber at present, but others do exist. I know that they agree with the principle of social mobility and giving people more opportunities. The problem is that many of us think the Bill will not achieve that and will make the situation worse. I shall expand on that argument and point to what I think might be a better avenue for my hon. Friend to go down, which would genuinely create better opportunities for young people to make sure that we have more social mobility.
I yield to nobody in my demand that we have more working-class people in some of the professions. I made a speech earlier this week in Westminster Hall in which I argued for more working-class people to be in Parliament and made the point that gender diversity does not deliver social mobility, as my hon. Friend wants. I pointed out that replacing Rupert from Kensington and Chelsea with Jemima in Kensington and Chelsea does not do a great deal for social mobility or diversity in this House, and that we should consider how to open up more opportunities for people from different class backgrounds. I agree with the sentiment behind the Bill, but I think it will be counterproductive.
Since I entered the House 11 years ago I have taken on so many people for work experience, as interns or whatever people want to call them or call themselves, that I could not begin to say how many people have spent time in my office doing one form of work experience or another. Like my hon. Friend the Member for Bury North, I refer to it as work experience because, as far as I am concerned, that is exactly what they are getting. Whatever we call it, and whatever we call those roles, these people, from what they have said, have all had a great experience and seen the workings of Parliament first hand. They have used that experience to go on and get fantastic jobs or to help them with their studies. If this Bill had been in place, and I had had to pay some or all of those people the minimum wage, I can state quite clearly that they would not have had that opportunity. That is not because I have any objection to paying people—that is not the case at all—but because we have a budget for staffing in the House. The budget is perfectly adequate, and I make no complaint about it, but there is not a great deal spare at the end of each year. So if my hon. Friend wants these people to be paid out of that budget, the only way of doing that is to reduce the salaries of the people who already work for me, and I am not sure that that would be entirely fair on them.
I will come to that in a bit more detail, but just so that I do not look like I am dodging my hon. Friend’s question, let me say that it has varied wildly: some people come for a day, some come for a few days and some—I would imagine it is the majority—come for a week. However, some have come for a period of months—five or six months in a couple of cases—and I will refer to them later, because part of their experience was part of what I see as the problem with the Bill.
The issue is what will be lost, and the definition in the Bill spells out what could be lost, not just in Parliament, but when people are looking for jobs elsewhere. Clause 1(b) says the national minimum wage would apply where
“the purpose of the employment practice is…that the intern meets learning objectives or gains experience of working for the employer listed in section 1(a);
and…to provide practical experience in an occupation or profession.”
That seems to be good old-fashioned, traditional work experience, but my hon. Friend seems to want to cover it through the minimum wage, and that would not be sensible. Learning and gaining practical experience are what is at stake. People doing work experience do it for the invaluable opportunity to gain that experience, and that is often something money cannot buy.
For many people thinking about going down a particular career route, spending even a small amount of time just seeing what happens and what the role actually means, rather than how it is portrayed in the media, is invaluable. They might actually think, “This job isn’t for me. I thought it was, because of what I thought about it, but after spending just a week here, I’ve seen what it’s really like, and it’s not for me.” The money someone can save by not pursuing a career that is no good for them is actually far more than they could ever earn by being paid the minimum wage for doing these things.
Do we not also have to have confidence in people and in the fact that they can make decisions for themselves? If they decide that they loathe the internship after a week, they are not paid and they are not contractually obligated, so they can leave and take on another internship or paid employment.
My hon. Friend is absolutely right—as he invariably is, I might add.
Under the heading “What is work experience?”, the Government’s own guidance on their website about the minimum wage, work experience and internships says:
“The term ‘work experience’ generally refers to a specified period of time that an individual spends with a business—during which they have an opportunity to learn directly about working life and the working environment.”
I should say at this point that work experience has actually proven quite an essential part of the Government’s welfare reforms—reforms that Conservative Members, including, I am sure, my hon. Friend the Member for Elmet and Rothwell, are very proud of. I am sure we all recall when the Government had to introduce emergency legislation because they lost the Cait Reilly case in the courts over the work experience she was asked to do as part of her benefits regime. The Government introduced emergency legislation, the Jobseekers (Back to Work Schemes) Act 2013, which made it clear in law that people on benefits should have to do work experience in certain circumstances. Labour Members agreed to help the Government rush through that legislation because they too saw the importance of those people having to do work experience. Stephen Timms, the shadow Minister at the time, gave Labour’s support to it. The legislation was about people doing unpaid work experience in the workplace because the Government believed, and everybody agreed, that that was one of the best ways to help them get into work. I think the Government said—I am happy for people to correct me if I am wrong—that about 50% of people on benefits who did the work experience got a job at the end of it. I would even be prepared to wager that my hon. Friend supported the Government in passing that legislation, because I am sure he appreciated how important that unpaid work experience was in people getting a job.
Perhaps controversially, I have always felt that being given benefits from the state provides an income that can be used to help to get work experience and move forward. This Bill seeks to help people who have absolutely no means of supporting themselves through the benefits system or an income outside it. That is a subtle but distinct difference.
I am grateful to my hon. Friend, but in making that helpful clarification he highlights one of the flaws in his Bill, because it does not make the exception that he has offered up with regard to who should be exempted from the terms of paid work experience. If he is saying that he wishes at a later date to add to his Bill another list of people who should not be part of it, then I welcome that. It is also the case that the Department of Work and Pensions introduced work experience as part of the youth contract, and that was probably one of the most popular parts of it.
I took on board my hon. Friend’s point—he made it very well—about some employers who might use internships for a purpose that some of us would not. I was struck by his example of Vivienne Westwood. However, we would be in danger of throwing the baby out with the bathwater if we went down the route in this Bill.
Clearly, an employer who wishes to pay an intern could and should do so, if they have the money, but if they have to pay for internships, that comes off the bottom line and is a cost to the business, so undoubtedly there will then be fewer internships.
That is absolutely right. This is the flaw in my hon. Friend the Member for Elmet and Rothwell’s logic. He says that he wants to even up the playing field to make sure that poorer people get the same opportunities that richer people get and take for granted. That is a laudable aim, and nobody disagrees with it. My fear is that he will succeed in evening up the playing field, but by making sure that nobody gets the chance to do work experience and internships. That is not my idea of success.
Let me refer back to a couple of points I made in my speech. Two thirds of internships are already paid, so this Bill would not affect them. For me, the figure we must consider carefully is that 40% of people who are offered an internship cannot take it. People talk about reducing opportunities, but we are getting close to half of people being unable to take the opportunity in the first place.
I will come on to that a bit later, because I have what I would like to think is a better solution.
It is a socialist outlook on life that says, “I would rather nobody had an opportunity than only some people had an opportunity”; it is certainly not one that any self-respecting Conservative could have.
I gently say to my hon. Friend the Member for Shipley that he quite rightly points out that my interest is social mobility, but rather than trying to bring it down to a common denominator I am trying to bring it up to a common denominator, so that people can access opportunities for social mobility. I understand his concerns, but there is a large difference between trying to push everybody down and being under the control of one socialist fist, and trying to make sure that everybody can go as high as they possibly can.
Yes, I absolutely agree. However, my view is that the outcome of my hon. Friend’s Bill would be to take away opportunities from people and not to add extra opportunities for them. I will make a suggestion a bit later—if I ever get the opportunity to do so, Mr Deputy Speaker—to suggest how we might actually do what my hon. Friend says, which is not to take away opportunities that exist but to make sure that there are more opportunities for other people.
Will my hon. Friend examine the figures just given by our hon. Friend Alec Shelbrooke? He said that 40% of people do not take up internships because they cannot afford to, but 66% of internships are paid. That does not seem quite to work. It must mean that people are refusing to take up paid internships as well as unpaid internships, in which case simply paying people will not solve the problem.
Of course my hon. Friend is absolutely right. That is a point that I, too, have considered during this debate, because my hon. Friend the Member for Elmet and Rothwell made a point about how expensive it is to live in London and to take accommodation in London, which is absolutely right. Many opportunities for internships and work experience are in London, so I have to say to him that paying under-18s £4 an hour—the current rate of the minimum wage for under-18s—will not give them the opportunity to come and take up a work experience place in London; they would still have to rely on parental support, other family support, or other means.
The Bill will not make a blind bit of difference to the people my hon. Friend is targeting. They still will not be able to afford to take up opportunities in London, which will still be the preserve of more affluent people. Again, that is why the Bill will not achieve what he sets out to achieve and why I think I have a better solution.
My hon. Friend Mr Nuttall was right: many people doing work experience are already entitled to the national minimum wage. We should make that point clear. I made it earlier in an intervention, but I see a difference between people who are—[Interruption.] I think that my hon. Friend Mark Pawsey does not agree with me here; he is a bit more hard-core than I am.
As a well-known softie, I take a slightly different view. There is a difference between companies and organisations that are actively seeking a member of staff to come in and do some work for them, are advertising for that and in effect are trying to get somebody to do that job for nothing, and other companies. These are personal things, I guess; I think that situation is different.
I have never advertised for an unpaid intern. I have never said that I want somebody to come and work for me unpaid for x period of time. I do not think that that is right. Whether it should be illegal is a different issue, but I do not think that it is right; it is not to my taste.
I was going to make a distinction. It is known that MPs provide internships, so there would often be no need for my hon. Friend to advertise his own internship. However, if other businesses were minded to take on a young person and provide them with experience in that way, they would need to provide some mechanism to do so, and placing an advertisement would seem to me the obvious thing to do.
That is a perfectly reasonable argument to make and I do not necessarily disagree with it. As I say, the questions that we decide in this place are whether things should be legal or illegal. I am merely saying that I do not personally think it is right to advertise for a job and expect someone to work unpaid; that is not to my taste. There is a world of difference between that and someone saying, “Can I come and do some work experience with or volunteer for you? I really want to do something. Will you accommodate me?” The problem is that the Bill does not distinguish between those two approaches, which is unfortunate, because there is a massive distinction between them.
Labour Members criticised the Government’s work experience scheme for people on benefits, saying that it allowed companies such as Tesco to exploit workers and get cheap labour. However, the Government said, quite rightly, that taking somebody on work experience is not cheap labour, because, usually, the employer has to invest an awful lot of time and effort into accommodating that person. I have no complaint about that. My hon. Friend the Member for Bury North is very happy to give up his time to give people career advice and help and support. I am sure that that applies to every Member, irrespective of their party. That is what we should do, but it is wrong to say that such people are a source of slave labour. The reality is usually the other way round: it is usually the employer who makes the sacrifice in order to give people the opportunity. I fear that the Bill does not accurately reflect the nature of that relationship. It seems to think that it is a one-way street when it is anything but a one-way street.
People are already covered by the national minimum wage legislation, and it would be wrong to pretend otherwise. Many forms of work experience, placements and internships are covered; equally, there are some, which may be referred to as unpaid work or expenses only, where somebody gives their services free of charge. My hon. Friend Mr Rees-Mogg has made a very good point: what is wrong with the principle of somebody giving up their time free of charge because they want to contribute to a cause they believe in, or because they want to help out? Who cares whether it is for their own benefit or for altruistic purposes? If that is what they want to do, why should we have a law that says that they must not be able to do it? I really do not think that the state has any business in stopping people volunteering for causes that they believe in. That would be the only possible outcome from the Bill: it would make it virtually impossible for people to volunteer for causes in which they believe.
The hon. Member for Elmet and Rothwell has mentioned data, but precise data are difficult to find. In 2010, the Government estimated that there were 70,000 interns at any one time. The most common length of an internship was recorded in a YouGov poll in 2014-15 as between four weeks and two months—that is very different from my experience of taking people on—with only 3% of internships lasting longer than a year. The same poll found that 26% of firms with an intern paid nothing or less than the national minimum wage. London Economics found that 13% to 16% of graduate interns are unpaid, but the Sutton Trust suggests that a third of them are unpaid. There is a big discrepancy between those two figures and I am not entirely sure which is right.
Many loaded statistics are used to justify a statutory requirement to make internships paid, such as those used to argue that unpaid internships are less likely to lead to a job offer, but with 47% of paid internships and 36% of unpaid internships leading to a job offer, it seems that both options are very good at enabling people to move pretty rapidly into a paid job. Surely one of the things that the Government should always be looking to do is to help people find a job as quickly as possible. It is clear from the figures that, whether it be paid or unpaid, an internship is among the most successful options in helping people find a full-time job. We should be celebrating that, not looking at how we can curtail it.
In 2010, the Chartered Institute of Personnel and Development did a survey of mainly large employers. It found that, among those that employ interns, 49% said that they paid interns the national minimum wage; 18% said that they did not pay interns a salary but covered their travel costs; and only 3% said that they did not pay them anything, meaning neither pay nor travel expenses.
The various options currently available for unpaid interns online show how useful such internships can be. One advert on indeed.co.uk says of its unpaid internship offer:
I am delighted to see that my hon. Friend Peter Heaton-Jones is in the Chamber. It goes on:
“Additionally over 70% of our internships have resulted in an offer of permanent employment.”
That takes us back to the point, which was made by my hon. Friend the Member for Rugby, that if the company did not advertise it, nobody would know that such an opportunity was available. It is great—surely we should celebrate this—that 70% of the people doing an internship get an offer of permanent employment at the end of it. It seems to me that we should celebrate that in this House, not make a mess of it.
CDP is offering the following:
“The internship will be at CDP’s London office and the successful candidate will have the opportunity to be involved in a range of activities within the Cities team. It will be a valuable experience for anyone seeking a career in the area of climate change, sustainability and the urban environment. The internship will run across key stages of the project, including defining the scope and structure of the outreach, communications planning, engagement and technical support”.
Again, I am sure that a lot of people who believe in the cause of climate change and want to do something about it would find such experience invaluable, either to see whether they want to pursue a career in that area or so that they can campaign on that issue in their spare time. We should welcome such opportunities, not decry them.
I am trying to go through a few points at speed, because I know that some of my colleagues wish to speak. When my hon. Friend the Member for Elmet and Rothwell proposed his ten-minute rule Bill in 2014, he said:
“Just last year, the National Council for the Training of Journalists found in its 2013 report that 82% of new entrants to journalism had done an internship, of which 92% were unpaid.”—[Official Report,
I am interested in that because when I was growing up, my ambition was to be a journalist. I am delighted that the Under-Secretary of State for Business, Energy and Industrial Strategy, my hon. Friend Margot James, is in her place, because I did a week’s work experience at the local paper in Stourbridge to see what it was like and to try to fulfil my ambition to become a journalist.
There is no reason on earth why I should have been paid by the local paper in Stourbridge for what I did. As it happens, I had the opportunity to write a couple of stories and visit the local court to see some cases and report on them. I clearly was not doing the job to a standard that deserved any payment. It would have been outrageous if I had been paid for my efforts, which obviously needed rewriting on many occasions before they were fit to appear in the local paper. However, it was great experience for me just to see what went on in a local newspaper office. It was also fantastic when I applied for a National Council for the Training of Journalists course—the one-year course in newspaper journalism that I did at Stradbroke College in Sheffield—to be able to point out that I had such experience. That counted very heavily in my favour when I applied for the course. It was not a great hardship that I was not paid by the newspaper for that work experience; it was actually for my benefit. It certainly was not for the benefit of the newspaper, which I suspect had to invest a great deal of time and effort in looking after me for the week, and the work certainly did not justify paying me anything.
The journalists weren’t still using quills, were they? I assume from what my hon. Friend has said that he went in every day for “regular work” and that he received “practical experience”, so it seems to me that he would have been covered by clause 1 of the Bill. The local paper may not have been so keen on having him if it had had to pay him.
I agree with my hon. Friend; that is the danger. Whether I was covered by the Bill might be open to interpretation, but my suspicion is that this would have a chilling effect on employers. Rather than getting in to some argy-bargy over whether someone needs to be paid, employers would prefer not to go into it. They would rather sit it out. There is nothing in it for them—and, to be perfectly honest, there was nothing in it at all for the employers in my case as it was all done for my benefit. That is my worry. It is great that newspapers take people on to let them see the ropes and find out what working for a newspaper is all about. As it turned out, to finish the story, I realised after doing my course at the Sheffield college that journalism was not for me. Perhaps I should have done a bit more work experience before I got to that stage, so that I could have learned that earlier.
My hon. Friend the Member for Elmet and Rothwell looks at this issue from one end of a telescope, but I look at it from the other end. If people doing unpaid internships get the chance to get a job in their chosen field as a result, it seems to me that not being paid for their work experience is a small price to pay. That, I am sure, is what the people who offer to do these internships think themselves. Some 75% of the workforce in this field could be without this vital experience if unpaid internships were banned, and 75% of the people who undertook an unpaid internship have successfully entered the industry in which they wanted to work. I think we should celebrate that.
My hon. Friend the Member for Elmet and Rothwell quoted Alan Milburn at length, but I am not sure that that is a particularly persuasive thing to do in order to win me round. Perhaps I was not his target audience. I am sure that we were all supposed to drop our objections the moment the name of Alan Milburn was mentioned, but it did not work for me. However, the report my hon. Friend mentioned, which was conducted by Alan Milburn was, I think, published in 2009—[Interruption.] I have been corrected, it was 2012. It used research conducted in 2004 by the University of Manchester, which found that about 80% of employers had employed former interns. Again, I think that is a cause for celebration today—that these internships are leading to jobs.
Intern Aware sent me a briefing at the time of my hon. Friend’s 10-minute rule Bill, saying that 40% of those who thought of applying for an internship had reconsidered because they did not want to work for free. Let us look at that the other way round. It means that 60% did apply for an internship. We have seen how successful these internships can be so we should celebrate them. People are not doing an unpaid internship thinking that there is absolutely nothing in it for them and that they are being exploited by an unscrupulous employer; they are doing it because they can see the future gain that they are likely to get from doing so. If they did not think it was in their best interests, they might as well have got a paid job doing something else.
It is patently obvious that the number of opportunities will decrease if all these people have to be paid the minimum wage. Why on earth would someone who is running a business take on someone with no experience and spend time helping them, when they could pay the minimum wage to someone who already had some experience and could crack on with the job straight away? If people have to be paid the same, irrespective of who is taken on, who would an employer be likely to take on? It will not be the someone who has no experience whatever; it will be someone who can be up and running on day one. We are talking about fewer opportunities for people who want to enter the workplace. Although that is an unintended consequence of the Bill, I have to tell my hon. Friend that it is a completely foreseeable one and we should not fall into that trap.
It was a known consequence that the introduction of the so-called living wage was going to cost jobs. When the previous Chancellor, my right hon. Friend Mr Osborne announced to a great fanfare the introduction of the national living wage, we knew straight away that it was going to cost jobs—for exactly the same reason as applies here. The Office for Budget Responsibility clearly stated when the living wage was introduced that, by 2020, as a consequence of the living wage, 4 million hours a week would be lost. It said that half of those hours would be lost on account of reduced hours for workers and the other half because of the loss of 60,000 jobs.
I could not believe my ears when I first heard that, so I checked with the House of Commons Library and the chairman of the OBR, and they could not have made it any clearer that increasing the amount that people had to be paid at the bottom end would cost 60,000 jobs. I do not know whether that is a great cause for celebration, although I know that plenty of people were celebrating at the time, but I do not really see it as such, and I suspect that the 60,000 people who are going to lose their jobs will not be celebrating by any means. In any event, the OBR made it abundantly clear that increasing employers’ costs in this way would mean far fewer opportunities. That is what it said about the national living wage, and it is obvious that, as night follows day, the same would apply to work experience positions if they were subject to the same regime.
I am absolutely at one with Mr Sheerman. It is a shame that he is not present today. He opposed my hon. Friend’s ten-minute rule Bill back in 2014, saying:
“Most people who know me might think that I would support the Bill, but the unintended consequence would be to damage some important opportunities for young people in our country. I…agree with the overall purpose of the Bill, but it will not hit the target. I am against exploitation and I am for fairness and social mobility, but I am also in favour of young people getting the experience that they need to enter the workplace. We need a balance.”—[Official Report,
I could not agree more with everything that the hon. Gentleman said. The House divided on the Bill, and I was a Teller alongside the hon. Member for Huddersfield. I opposed it then, and I still oppose it today
Another issue that will not, I suspect, be addressed by the Bill is nepotism. My hon. Friend speaks of ordinary kids with modest backgrounds finding it difficult to access top jobs. It seems to me, however, that the problem is not that they are not paid for the jobs, but that, in many cases, they do not get a look in to start with. I think I am right in saying—and I should make clear that I do not decry anyone to whom this applies—that about one in 12 MPs is related to another MP, either current or former. I am not entirely sure that the Bill will make any difference to that—perhaps it should not make any difference—
It was not for me to pinpoint anyone in particular, and I should say for the record that the ones who are in the Chamber are among the ablest and most effective. I would not have wanted to do anything that would have prevented them from being here. That is not my point. My point is that, in all circumstances, people will use whatever opportunities they have to further their aims and ambitions, and we should not criticise them for that. The notion that if we pass the Bill we will end up with a system that provides equal opportunities for everyone is for the birds. That is just not going to happen. I do not think that my hon. Friend would make many inroads with this measure even if it were successful.
It is commonplace in business, and in other spheres, for people to secure opportunities such as internships and placements on the basis of who they know rather than what they know. I would like to think that the fact that we in this place and are able to offer unpaid internships, work experience or whatever we want to call it to all our constituents if they ask—I certainly would never refuse a constituent, and indeed I try to accommodate as many people as I can who are not constituents—means that everyone, not just people we know, is being given an opportunity. I think that unpaid internships are extending the opportunities to more people, and I do not think that it is simply a question of giving the opportunity to someone we know or to a relative. That is why I think that my hon. Friend is attacking the problem from the wrong end.
I am grateful to my hon. Friend for being prepared to be flexible with his Bill. We should commend him for that. I think there are areas where my hon. Friend can make the Bill better, but just making it better does not make it better than the status quo, so I cannot promise that if he were to amend it in that way it would all of a sudden command my support. I would say, however, that the Bill can be better than currently drafted, and my hon. Friend might want to explore that avenue. I am not entirely sure the Bill can be amended to make it into a good Bill, but it could be amended to make it a better Bill.
We should be clear about the rates of the minimum wage. It varies depending on people’s age. That is because we want to make sure that younger people get a fair crack of the whip; they would potentially be overlooked for someone older and more experienced if the minimum wage was the same across the board. So the Labour Government introduced a minimum wage, which has been maintained, which varies depending on age: it is £7.20 for those aged 25 and over, falling to £4 for those under 18, with different scales in between. In this context, I want my hon. Friend to bear in mind a further unintended consequence of introducing his Bill: there would clearly be an inbuilt advantage to take on younger people as interns if they have to be paid, because if they are being paid the minimum wage, they will be being paid less than the cost of taking on somebody older. In this case, therefore, for the business concerned it would be a case of the younger the better. Schoolchildren would be exempt, as would students in full-time employment if it was part of their course. So this means anyone of that age could be taken on as an intern—schoolchildren could be taken on as interns for free—but for those aged 25 or over, the sum would be £7.20 an hour right away.
Somebody of 25 or over might, however, be in the greatest need of work experience, because they have clearly been finding it pretty difficult to get themselves a paid job, and they are having to do more to make themselves employable. It would be unfortunate if people in that position, who are striving to get a job and are prepared to do whatever it takes, are turned away because they have to be paid £7.20 an hour, which an employer either could not afford or was not prepared to pay. They might take on someone younger who does not have the same needs. One of the flaws of the Bill is that it is not needs-based; it does not look at who most needs these internships. Its strategy is too simple and is therefore flawed. Older people will lose out first even though they are most in need. That would need to be amended.
There is also no exemption in this Bill for participants in Government schemes or programmes to provide training, work experience or temporary work. I do not know whether that would conflict with other Government legislation. I imagine there would be another charter for making lawyers richer—as my hon. Friend the Member for Bury North feared—in establishing which legislation had precedence. I am not a lawyer, and those with a legal background would be better placed than me to comment, but my understanding is that usually the latest legislation trumps previous legislation.
I am grateful for that guidance, Madam Deputy Speaker, but I fear that if I got sidetracked into talking about the latest decision by the High Court, we could be here for quite some time. I want to return to the issue but not today; I will save myself for another day, when I will tell the House what I really think of those judges and their ruling.
What I take from the intervention by my hon. Friend Mr Rees-Mogg is that, like me, he suspects that the Bill would in effect supersede previous legislation about work experience from Government schemes. We would therefore get ourselves in a bit of muddle. We all agree—both sides of the House agree—that people on benefits doing work experience is a good thing that should be expected of them, unpaid. It helps them to get a job and we do not want to interfere with a system that works very well for lots of people who are looking for jobs. The Bill would need amending on that basis.
My hon. Friend the Member for Elmet and Rothwell mentioned volunteers. If he gets chance to wind up the debate, I hope he will deal with that issue because we have not had clarity on it. It is referred to in the explanatory notes, but they do not say a fat lot more than the Bill says, if I am honest.
The Bill is about enforcing the national minimum wage, and when the National Minimum Wage Bill was going through Parliament in 1998, the issue of volunteers was dealt with at length. The Minister at the time, Ian McCartney, said:
“I am pleased to say that the entire approach to the clause has been marked by a consensus both on our aims and on the means of achieving them. We want to ensure, first, that genuine volunteers—who give their time to good causes—are not caught up in the Bill’s provisions.”—[Official Report,
The Labour Government at the time were clearly concerned about that issue, which was raised in the Bill Committee. I was not here at the time, but it appears that the Labour Government made changes as a result of concerns raised in Committee, which are the same as those raised by my hon. Friend the Member for North East Somerset, and they had discussions with people who were concerned.
During the debate, the then Minister said:
“We are conscious, however, that there is a grey area. The definition of ‘worker’ in clause 52” of that Bill
“is quite wide, although no wider than the definition used for the purposes of provisions on unauthorised deductions in the Employment Rights Act 1996”.—[Official Report,
It is an area of concern, and I am not entirely sure that the Bill does a great deal to clear up any confusion about that issue. It seems that the original National Minimum Wage Bill was determined to try to exclude real, genuine volunteers who were volunteering because they believed in a cause, so it would be strange if volunteer interns were now caught up in legislation that they were never really intended to be caught up in in the first place.
I might just say, Madam Deputy Speaker, that Mr Speaker spoke in the debate in 1998. I mention that not because I wish to draw him into the debate now—I do not—but because I agree with the point that he made. He said:
“Are there not instances in which a person works in a charity shop, not for an honorarium but for a modest but regular payment that is below the national minimum wage, and in which, if the shop were obliged to pay that person the national minimum wage, it would have to cease to employ that person? Would not that be a most undesirable state of affairs?”—[Official Report,
Following advice on drafting the Bill, clause 1 tries implicitly to make the point that it does not apply to the charity sector, by not listing that sector among the areas that the provisions apply to. We can get into the legal ups and downs, but that is the advice that I was given on exempting the charity sector, to address the specific point that my hon. Friend has just raised.
I can understand the point my hon. Friend makes. The Bill makes it clear what a workplace is, but clause 3 deals with exclusions, and there is no mention of the charity sector in that clause. I absolutely understand what he is saying, but I am not sure that it is abundantly clear that that sector is excluded. A stated exclusion would have been helpful to clarify this point once and for all.
My hon. Friend has drawn the attention of the House to the problem of volunteers. We have already established the fact that anyone who is doing work, whether or not they are called an intern, is covered by the national minimum wage legislation. If we are prepared to accept that volunteers will be excluded from the Bill, even though that is not explicitly stated, are we not left with a situation in which the only people who will be covered are the people who are doing nothing and who are simply turning up to watch?
My hon. Friend is absolutely right.
The Bill’s attempt to expand opportunities seems to be all stick and no carrot. I have been looking at what happens in other parts of the world. My hon. Friend has touched on some examples of this as well. In a submission from Perspective in 2013 in favour of paid internships, Robina Longworth cited other practices from around the world. However, as far as I can see, none of the countries listed pays the minimum wage to interns. China and Hong Kong, for example, have subsidised internship programmes for university graduates and hiring companies are eligible for tax breaks and loans. Perhaps my hon. Friend the Member for Elmet and Rothwell might like to consider giving tax breaks to companies who take people on. That might be a better carrot to offer.
My hon. Friend will have noted my proposal to add some carrot by exempting national insurance contributions in the same way as is done with apprenticeships.
I am grateful to my hon. Friend for that intervention. It is inconceivable to me that the Bill would not result in fewer internships being offered. There would undoubtedly be fewer internships and work experience places. Nobody could say that the Bill would result in more such opportunities for people; there would be fewer. My point is that we should encourage businesses to offer more opportunities, particularly for those who do not get a fair crack of the whip. I know that he and I, and many other Members across the House, would like to see that happening, and perhaps tax breaks would be the answer. Rather than telling companies that they had to pay extra for offering these opportunities, perhaps we should consider giving them a financial incentive to do so. That seems to be a much more sensible and conservative way forward. I welcome what my hon. Friend said about national insurance contributions, but perhaps he should also consider tax breaks.
In Poland, there is financial support for engaging young people on internships. In Korea, there are wage subsidies for small businesses that hire interns on regular contracts. Those subsidies are offered at the conclusion of the internship, so the business is given a carrot to take the person on after they have been given a go to see whether they are good enough. And that is not just about the company seeing whether the intern is good enough; it also offers the intern an opportunity to see whether they want to work in that company or industry. That system appears to work for both sides.
I have had an idea for another thing that would be far better, and I hope that my hon. Friend will take this on board because I feel strongly about it. I have wondered about extending student loans to young people who do not want to go to university but want the opportunity to do something else. We give student loans to people, and I am sure that my hon. Friend would say from a social mobility point of view that they often go to people who are already affluent. In effect, the state gives them a subsidised loan at a preferential rate to enable them to live while at university and get a degree, which will then in all likelihood lead to them getting a higher-paid job than if they did not have a degree. It could be argued that it is like throwing apples into full orchards and that we are subsidising the people who are best off.
However, people who do not go to university are often the poorest in the country and they get nothing. They do not get a subsidised loan to pursue their career ambitions. Why not offer something like a student loan to, for example, someone from a poor working-class background in Yorkshire—
Certainly not Lancashire.
That person may want to pursue a career in which they have a great interest, and such a loan, at a preferential rate, could give them the opportunity to come down to London to do the relevant work experience. They could then pay the loan back, just as university graduate does, when they are in a job that pays a certain amount of money. That would extend opportunities to people who currently do not get them. I have never quite understood why the only young people who get subsidised loans from the Government are those who go to university. What about all the other people who want to do something different?
Specifically on those points, it will not have escaped my hon. Friend’s notice that the Bill contains an exemption for people on accredited degree courses. We were willing to put that in because many accredited degree courses contain a period of internship and—this was my reason—have access to student finance. He makes a valid point about granting that access to other people on the same terms, but—this is where I would blend my Bill in—there is a question about how to sort out the time limits on such a scheme. I am listening carefully his comments. The Bill probably will not move into Committee, which is a great pity because many important things have been said in this debate that would help to develop it.
I am grateful to my hon. Friend. He is being typically constructive, which goes to show that his dedication is not to a piece of legislation but to getting the best possible outcome for the people he wants to help. We all recognise his passion for this, and I am happy to work with him to help deliver it.
Let us take someone who wants to work in the fashion industry or the music industry, for example. The fashion industry was mentioned earlier, so let us say the music industry. It may be that doing a degree would not help them get a foot on the ladder in the music industry; it may or may not—I do not know the industry particularly well. It may well be, however, that spending six months at a record label in London after leaving school would represent a massive head start in getting a career in the industry. It would be good if the Government offered some kind of loan to enable someone to get that opportunity. They could then pay it back when they get a decent job in the industry. That would be a way to extend opportunities to more people, whereas the Bill would restrict opportunities.
That is a tremendous idea, to which I am hugely attracted. Small and medium-sized enterprises might also be hugely attracted to using such people in their companies.
Certainly not a red rose. A red letter is far better than a red rose any day of the week.
As for Members of Parliament, an FOI request of IPSA asked about the number of interns and paid interns working for MPs over the past three years. It seems that about one in four MPs took on a paid intern, but I am pretty sure that virtually every MP takes on people to do work experience of some sort or another and that everybody who does so gets something out of it. Given the number of people we take on to give that opportunity to them, if we had to pay them all the minimum wage, that would take up a sizeable part of our budget. It would mean either that we could not afford to take them on or that we would have to give our existing staff a pay cut. Neither of those would be a palatable option, but they would be the only options available to us.
Strangely, the Bill does not seem to recognise that people have short-term and long-term internships. My hon. Friend the Member for Elmet and Rothwell mentioned that issue, so I will not go into it further as he would wish to look at it. I have spent longer than I expected speaking to the Bill—[Interruption]—because of the number of interventions I have taken. In concluding, I just wish to mention a couple of people who have spent time with me. Before I go into that, I should just say that the Bill will mean we will probably end up with more people on zero-hours contracts. I know that quite a lot of Labour MPs employ people on those contracts, even though they are against them politically. [Interruption.] Does that mean zero-hours contracts are a good thing?
I am conscious that my hon. Friend is drawing his remarks to a close, but what I have drawn from his comments is that he agrees with me that there must be a mechanism by which people can do these roles and be able to live, survive and do something. He has come up with interesting suggestions, but I think that he recognises the premise that we reduce social mobility if someone simply cannot afford to take up the post.
Yes; as I said at the start, we all want to achieve the same thing, which is to expand the number of opportunities for people, particularly those who do not always get them at the moment. I do not know anyone in the House who would not share that ambition—I certainly do. The Bill would take us in the opposite direction, which is why the suggestions I have made would be better in trying to deal with the position my hon. Friend has set out.
In conclusion, I wish to talk about a couple of people who have spent time with me. One of my previous researchers, Grainne, initially started working at my office on an “unpaid internship”, as it would be described; it would fall within the scope of the Bill without any shadow of a doubt. She had left university and was struggling to get a job. If I had had to pay her, I would not have taken her on, not only because I could not have afforded to, but because I knew nothing about her. I did not know anything about her credentials, but she wanted to come to have a go and I was happy to facilitate that. This is what she said about the value of her internship when she went to speak at a school about her experience of getting a job in politics:
“Having tried unsuccessfully for months to get a paid job, the feedback I kept hearing again and again was that ‘you don’t have enough experience’. But how do you get experience if no one will give you a job? So I decided to apply for an unpaid internship with Philip Davies MP—in the hope this would lead to something more… I was made to feel like a fully integrated part of the team and given a wealth of opportunities that I would otherwise not have achieved.... Without my unpaid internship I am convinced I would not have been given such an excellent opportunity.”
When a job became available in my office, I gave it to her because she had proved herself and done such a good job in that time. She went on to say:
“From Parliament I moved to a Comms agency, before working in the Public Affairs team for a large corporate. I then became a Special Adviser and am now back in House working for a FTSE 125 company as their Director of Corporate Affairs.”
She is about 30 years old. She continued:
“I would not have been able to achieve any of this without my unpaid internship.”
“Without the internship I very much doubt I would be working where I am today. Being able to have that first hand experience on my CV was invaluable to getting the job I have today, and I have been able to apply the experience gained to other areas in my role now”.
I employed my current researcher, who has done a marvellous job helping me on the Bill, after she completed a two-week work experience placement while at university. She did that not as part of her university course, but in the holidays, because it was something that she wanted to do. I am not sure whether that would be covered by the Bill, but I suspect that she would have had to be paid. She said that without doing those couple of weeks in the office, she would not have had the opportunity to show herself capable of the job when it arose, and that is absolutely true.
I want to see more opportunities for work experience and internships, and the Bill will inevitably lead to fewer such opportunities. I admire my hon. Friend’s passion on social mobility, but I hope that he will reflect on the ideas that I have set out today. In future, perhaps a Bill that covered some of the points made today will go some way to achieving the ambition that we both share.
I congratulate Alec Shelbrooke on bringing the Bill before the House. He has sought to introduce legislation on the issue previously, and I commend him on his tenacity. I am glad that a Government Member has taken to heart the Prime Minister’s promise to work for the many, not the few, and is using his initiative to make that pledge a reality.
For our young people leaving university and looking to enter the world of work, a degree is not the passport to job security that it was for their parents and grandparents’ generation. Competition in the graduate job market is fierce. One estimate is that there are 73 applicants for every graduate role. In that environment, employers will plump for the candidate with the most experience, but there lies the trap that too many young jobseekers fall into: they cannot get a job without experience, but they cannot get experience without a job. Internships are a great way to gain that experience and enhance a CV. When they are done well, they are a great boon to employers and interns alike.
The RISE scheme in Sheffield, for instance, is a collaboration between our two universities, the city region and the private sector. It has so far placed 200 graduates with 120 small and medium-sized enterprises that would not normally recruit interns, with minimum pay requirements built in. There is also the recruiter Instant Impact, which specialises in finding paid internships with start-ups. Or why not look closer to home? I do not want to be accused of buttering anyone up, but the Speaker’s parliamentary placement scheme does fantastic work in making this place accessible to people who would not otherwise have had the chance to work here, and paying them properly into the bargain. When I was elected back in May, I inherited a young man who was coming to the end of his placement on the scheme. He waxed lyrical about the boost it had given both his CV and his broader outlook, and he was an absolute life-saver for me when it came to getting myself set up and finding my feet here.
However, the Bill deals with the other side of the coin: unpaid internships, through which employers take advantage of young people who are desperate to break into highly competitive sectors, or simply trying to improve their prospects. The system is rigged in favour of those who can afford it—or perhaps it would be better to say whose parents can afford it. Young people from my constituency, and indeed most young people across the country, cannot afford to work for nothing. Careers in law, medicine, the media, fashion, finance and the arts are all beyond the reach of some of our brightest and our best. Those careers are monopolised by the children of the wealthy, who can support them through months of unpaid work, while those from more modest backgrounds are shut out. It is not just social mobility that suffers; by denying opportunities to so many young people, businesses are missing out on hiring real talent, simply because of that talent’s background.
There is, of course, also the simple moral imperative to ensure that someone doing a fair day’s work receives a fair day’s wage.
I would have to have a quiet word with them about that.
I appreciate that the hon. Member for Elmet and Rothwell has linked this Bill to the minimum wage, rather than the so-called living wage. We have to strike a balance between providing fair pay for younger people and making internships too expensive for employers to run. By ending the exploitation of young people through internships, this Bill goes a long way towards levelling the playing field.
I have been brief because I realise that the hon. Gentleman is passionate about the subject of his Bill and I do not want to contribute to its being spoken out.
It seems appropriate that in a debate about working practices, I should be multi-tasking, speaking as I am from the Parliamentary Private Secretary’s Bench. I ask that the aides to the Minister resist the temptation to send any notes to the Minister while I am on my feet.
It is a pleasure to follow Gill Furniss, but it is a particular pleasure to follow my hon. Friend Philip Davies, whose reputation for scrutinising legislation on a Friday precedes him, as does the reputation of my hon. Friend Mr Nuttall. My hon. Friend the Member for Shipley made several references in his speech to my legal and familial antecedents, and as he was speaking I was reminded of the comment from my hon. Friend Alec Shelbrooke about the need to be thick-skinned on these Benches.
The comments of my hon. Friend the Member for Shipley contributed to the debate to this extent: my experience of seeing my father work in this place meant that I understood how much good can be done here. Is that not the point of internships and work experience? It is about opening minds and giving young people and older people the chance to see work environments and job opportunities of which they may have no personal experience, and to see the opportunities available to them.
I pay tribute to my hon. Friend the Member for Elmet and Rothwell for bringing this debate and for bringing to life an area of law—employment law—which can be pretty dry at times. In his speech my hon. Friend has shown the real impact that it can have on people’s lives when they are trying to start out on their career. His speech and his Bill show just how important that is. For us to create a society that works for everyone, we must ensure that access to fulfilling or well-paid careers is not limited to the privileged few. Talent and hard work, not where one went to school or the size of one’s parents’ bank account, should determine one’s success.
I part from my hon. Friend, however, on the means by which we achieve this aim. The provision to pay interns already exists in legislation. Guidance, combined with steps to encourage employers to adopt best practice in their workplaces, is the best way to tackle the issue. I am pleased that it has been raised in the House, as work experience and properly constituted internships are an invaluable way of helping young people decide which career path they would like to take.
In September I held the first Louth and Horncastle jobs and apprenticeships fair. There are many successful local businesses in my constituency and many talented people looking for work, as well as students who are at the beginning of their careers and would like ideas about what they should do for the rest of their lives. I wanted to bring them all together. I am happy to say that at the jobs fair more than 200 people attended, with both local and national businesses showing at the fair, including Luxus, Polypipe, BAE Systems, Butlins, National Grid and Walnut Care. We had pretty much every opportunity one can think of covered by the employers on hand.
I hope that work experience and internships may help some of my constituents start fulfilling careers. Later this afternoon I am welcoming students from Somercotes Academy, who have come to this place to see democracy and debate in action for themselves.
Work experience can be an invaluable learning experience and allow young people to meet potential employers and colleagues, and it can even help someone realise that a particular career is not for them. I remember a couple of days of work experience I did, although I will not name the profession for fear of offending many people in my constituency. I walked into the office and realised within moments that this was not the career for me—I suspect the profession involved dodged a bullet when I made that decision. Internships can be just as valuable in showing people where their paths do not lie as where they do.
I concur with my hon. Friend’s laudable aim to ensure fair access to the opportunities created by work experience and internships. We must do all we can to ensure these opportunities are made available to talented young people from all backgrounds, because this is not just about the fundamental unfairness of refusing to pay someone for the work they have done; it is also about the impact on social mobility. Those from wealthy backgrounds have far greater resources on which to draw, in terms not just of income but of contacts.
My hon. Friend spoke at length about the experiences of students in the fashion world and the art world, and those anecdotes showed clearly the troubles we face. He also said that 40% of internships were turned down by people who felt that they could not do them. As he said, that cannot be the right way to go with this issue.
Another important point is that ensuring there is equal access to these opportunities makes good business sense; it widens the pool of talent to which businesses have access, making it far more likely that they will employ the best person for their organisation.
Now I turn to where I part company from my hon. Friend. The Bill states:
“An intern who enters into a workplace internship shall be remunerated by his employer in respect of his work at a rate which is not less than the national minimum wage”.
Under the National Minimum Wage Act 1998, interns who are genuine volunteers, who are under no under obligation to perform work or provide services, will not fall within the definition of worker and will not be eligible for the national minimum wage. However, if an organisation treats an intern as though he were worker, a contractual relationship may arise, and the person is then entitled to be paid the national minimum wage. Consequently, provision to pay interns already exists.
Given my hon. Friend’s profession, is she aware of the case of Edmonds v. Lawson in 1999? Miss Edmonds was a pupil barrister, and she successfully claimed that, while she was on her pupillage, she was actually held to be on an apprenticeship. She sought a declaration from the Queen’s bench division of the High Court that she was a worker under a contract of apprenticeship.
Indeed, as I mentioned, when I did my pupillage, which was just before that case was decided, pupillages did not have to be paid, so I spent the first six months of my pupillage not being paid while I was very clearly working. Happily, as I said, the Bar—I remind my hon. Friend that it is constituted of self-employed people, not companies—has now made it mandatory for pupillages to be funded. I forget the level at which they are funded, but it is well above the national minimum wage.
Certainly it did for the years following the introduction of payments for pupillages. However, it was felt that, in the longer term, the pupillages would be of a higher quality, because a chamber would be very much focusing on making sure it got the right calibre and quality of candidate to suit its business, rather than being a bit of a factory of pupillages and encouraging people who, sadly, did not then later find better, long-term employment.
I am glad that this debate has been brought to the House, as it is important to raise awareness of when an intern is due the national minimum wage so that the 1998 Act is followed. In our current legislation, the term “intern” is not defined explicitly, and it can be ambiguous as to whether a person performing an internship also falls under the definition of “worker”. Work experience can be called a placement or an internship, and volunteering schemes that do not involve working activities are also often referred to as internships. As this is a complicated area where the line between what should be an unpaid internship and a contractual working relationship is often blurred, and can indeed be crossed without either party meaning to do so, it is most effective for the Government to offer guidance to assist employers to adopt best practice.
The Minister may well take away from this debate the point made by my hon. Friends the Members for Elmet and Rothwell and for North East Somerset (Mr Rees-Mogg) about the maximum of 28 days in any calendar year. That would be a good starting place for working out whether a person is an intern or somebody on work experience, or whether they have entered into a more contractual relationship with the person offering the experience. It is vital that employers as well as employees are aware of the statutory provisions that are available, because some of these roles do not require the minimum wage to be paid. There is no doubt, however, that there are situations where what is referred to as an internship describes work activities, and those participating in the scheme should be paid. I applaud my hon. Friend the Member for Elmet and Rothwell for drawing attention to that ambiguity.
While I welcome the information provided by the Government through their website, gov.uk, and ACAS, I urge them to continue to review the effectiveness of the guidance they are offering in this area. I encourage all businesses to make provision to allow young people of all socioeconomic backgrounds such opportunities.
My hon. Friend is absolutely right that internships and work experience can give opportunities to young people. Many charities and small businesses could not necessarily afford to pay for internships. It is therefore important to have greater clarity on what is appropriate, and I congratulate her on asking the Government to keep this matter under review.
I am extremely grateful to my hon. Friend. I also welcome the work done by the Government to promote fair and open access to paid internships through the graduate talent pool, the social mobility business compact, and the common best practice code for high-quality internships, which ask employers to ensure that any internships they offer are paid fairly.
Alongside offering guidance, we must continue to crack down on employers who are not treating employees fairly. I welcome the fact that this year the Government have increased HMRC’s enforcement budget by £7 million, improving its ability to crack down on employers who exploit interns and fail to pay staff properly. I declare an interest in that I used to prosecute criminals for HMRC. I wish it well in its endeavours. Employers who pay workers less than the minimum wage not only have to pay back arrears of wages at current minimum wage rates, but face financial penalties of up to £20,000 per worker. I hope that the message leaves this Chamber today that it is not worth employers trying to get round the rules, and that they must treat their employees and interns fairly.
My hon. Friend is summing up very well a lot of what has been said. She was in the Chamber when I spoke and will have heard my comments about the model contract from the Institute of the Directors, and the voluntary internships with Vivienne Westwood being advertised from
Order. I hesitate to interrupt the hon. Lady, but she must not use the word “you”. If she uses the word “you”, she is referring to the Chair and its occupant, and I am the only person here in this Chamber this afternoon who has not made any points whatsoever. I know that that is not what she meant—she meant the hon. Gentleman—and I am quite sure that she can rephrase what she has just said.
I am extremely grateful to you, Madam Deputy Speaker, and I apologise for any discourtesy; none was intended.
I agree very much with my hon. Friend the Member for Elmet and Rothwell, and I would imagine that any business would be embarrassed to hear itself being spoken about in the way that that company has been spoken about in this debate. We know that the matter has reached the national media and I hope that they will also take notice of what has been said today in the Chamber.
In conclusion, internships and work experience should help young people to build their careers on merit and hard work, regardless of their background, and while I do not believe that this Bill is the most effective way to achieve that, I pay tribute to my hon. Friend for his long-standing campaign to speak up for social mobility and for young people, not only in his constituency but across the country. I thank him for bringing this Bill to the House.
It is a pleasure to follow my hon. Friend Victoria Atkins, and indeed other colleagues from all parties in the House, particularly my hon. Friend Philip Davies. I do not have any ambition to try to match his oration master-class of one hour and 15 minutes. He made some excellent points, some of which I had intended to make, so I will cut my contribution short; I am sure that will be to the convenience of the entire Chamber.
I congratulate my hon. Friend Alec Shelbrooke on securing the Bill. This issue is incredibly important and he has campaigned on it for a considerable time. I applaud all his attempts to bring this matter to a wider audience.
This topic goes to the heart of what this Government are seeking to do, which is to improve social mobility, creating—if I may say so—a country that works for everyone and raising as many people as we can up the ladder of social mobility. I genuinely think that internships and work placement schemes are a vital part of achieving that.
I will address the issue of internships more broadly, before addressing some of my concerns about my hon. Friend’s Bill.
Internships are incredibly important in the longer term, securing professional employment for younger people, and sometimes not-so-young people. Statistics show that internships are a vital route for many people into employment. Reports that I have found show that 30% of graduates completed internships with their employer before getting their job, and in some sectors the figure rises to 50%. In many professions, completing at least one internship within the industry is essential.
My background, like that of some other colleagues who have spoken, is as a journalist. It is almost impossible for someone to get professional employment as a journalist unless they can prove on their CV that they have already had some journalistic experience, usually in the form of work experience or an internship. That is just one example of how internships are vital for entry to many professions.
The Government have estimated that there are currently about 70,000 interns in the UK, of whom 15,000 are unpaid. However, I think those figures mask the true scale of what is happening. There are a great many informal —for want of a better word—internship arrangements across many professions, which I suspect are probably going unmeasured in those statistics.
Internships are valuable to individuals. They help them to understand the reality of the career area in which they want to work. They then develop skills that become valuable throughout life—not just in their particular profession or chosen career path, but in the wider world. Ultimately, an internship helps people to reach an informed decision about whether they do, in fact, want to spend their life, or a particular part of it, in their chosen career.
Importantly, internships are also extremely beneficial to the employer. They give them an insight into an individual’s skills and character to a far greater extent than any interview, application form or CV. My hon. Friend the Member for Shipley mentioned the benefits to the employer of finding out an individual’s skills set, because that may help both of them to come to a decision about future employment. That is important.
For young people today, internships are an essential element of searching for a job and, consequently, getting on generally in life. I and my hon. Friend the Member for Elmet and Rothwell want to ensure that internships are available as widely as possible and that those from less privileged backgrounds are able to access them. That is so important and I will come on to address that challenge. At the moment, there seems to be a large element of, “It’s not what you know, but who you know”, in enabling people not only to get on in many careers, but simply to get a foot in the door with many internship programmes.
I am grateful to my hon. Friend for addressing those points. May I urge him to focus on the statistic that shows that 40% of people who are offered an internship have to turn it down because they cannot afford do to it? On opportunities and choice, we are getting close to a situation where half of those offered an internship cannot afford to do it. As my hon. Friend has said, internships are becoming a massive means of getting into the professional job market, so I urge him to keep that statistic in mind when he moves on address opportunity.
My hon. Friend makes a good point and I will seek to address it later in my remarks.
On social mobility, unpaid internships can be extraordinarily expensive for many of those wishing to go into the professional services, which are often located in the bigger cities and, in many cases, far away from rural constituencies such as mine. If young people in North Devon wish to undertake an internship in one of the larger cities, that will mean paying travel expenses and finding accommodation. For many—this goes to the heart of the point that my hon. Friend has just made—that is simply prohibitive. I do understand that that is a problem. If internships are accessible only to those with financial means, we will entrench a system where the professions are disproportionately dominated by those from families with higher incomes.
As my hon. Friend has said, internships are often available only in large cities, with London being the predominant area. Does he agree that that places even more responsibility on large employers, which have the resources properly to support interns and those seeking work experience with them, to pay high costs such as those for accommodation and travel?
That is a good argument, but the difficulty is that I am not sure that the Bill addresses it. That is my problem and my challenge to my hon. Friend Henry Smith makes a good point and I will address later the internships offered by the small and medium-sized enterprises that dominate my constituency and many others.
I applaud those employers that do provide funding for internships—there are some—whether it be in the form of pay or expenses. Many charitable bodies, trade associations and universities provide bursaries or similar so that those of limited means can access internships. All these schemes are essential in ensuring that, no matter their background and financial means, people who work hard and are dedicated will achieve their goals. The schemes open the door to the opportunity of an internship.
There is of course always more that can be done. I am glad that this Government are working to promote high-quality paid internships through improving codes of practice, creating awareness campaigns and, importantly, sponsoring the graduate talent pool. These will all make internship opportunities available to those from poorer backgrounds. We must remember—this goes to the heart of our discussion—that an even greater block to accessing internships for many people is a lack of contacts. Put simply, they do not know the right people. That is often a greater block than a lack of pay, so it is right that the Government have acted with initiatives such as the graduate talent pool.
As I have already hinted, my difficulty with the Bill is the level of pay that it expects the facilitator of an internship—the employer—to pay. Broadly, as my hon. Friend the Member for Elmet and Rothwell has mentioned, there are two categories in the existing national minimum wage legislation: workers and apprentices. Workers provide a trade or service in return for remuneration and have an obligation to provide this work—I must sound as though I was an hon. and learned Member, which I assuredly am not—while apprentices receive a lower rate of pay, because although to a degree they provide the same services as workers, they receive on-the-job training. Consequently, the pay level for apprentices recognises that the employer invests time and resources in them, and they do not have to be paid as workers. In my view, interns are closer to the category of an apprentice, rather than that of a worker.
Internships provide individuals with experience and training, which helps them to deliver and gain employment. The Bill states that
“the intern meets learning objectives or gains experience of working for the employer”, and that the internship provides
“practical experience in an occupation or profession.”
In my view, that is largely what an apprenticeship achieves. Workers, who receive the national minimum wage, do not set out to meet learning objectives or gain experience of working for the employer. That is almost ancillary to their role, which is to provide a service in return for their remuneration. Interns do not provide for the employer the same value as a worker, if I may put it that way, so their pay should not be the same. If I may say so to my hon. Friend, that is one of the flaws in his proposed Bill.
My hon. Friend will have heard the examples I have given of major multinational, multimillion-pound corporations, such as KPMG, making it very clear that everybody working in their organisation is contributing to it. It is unfair to say that interns in a business do not contribute in the same way as others, as in the case of somebody working for Vivienne Westwood.
I must apologise to my hon. Friend. I did not mean that interns do not add value; I think they add incredible value. Interns in my office have added incredible value. I was merely seeking to draw a distinction in law about the difference in status, as it were, between workers and interns or apprenticeships. Interns absolutely do add value, but I was seeking to make the point that if an intern’s circumstances mirror those of a worker, they will be covered by current employment law.
Another issue in relation to social mobility, which in my view is so important, is whether internships should exist at all. This is the heart of what I am seeking to say in this speech. My fear—fundamentally, if simplistically—is that increasing the cost of interns will inevitably mean that fewer internships are available. That is especially the case in constituencies such as mine of North Devon, where the vast majority of employers contributing to the local economy are small and medium-sized enterprises.
If those SMEs are forced to pay interns the national minimum wage, my fear is that many businesses in North Devon will simply not be able to afford to set aside that sort of money to offer internship opportunities. It is important not to choke off the opportunities available to our young people—and indeed others—and I fear that an unintended consequence of the Bill might be to do just that in areas such as North Devon where SMEs make up the vast bulk of employers and thus provide the vast bulk of opportunities for possible internships.
Yes, but in the context of my hon. Friend’s Bill, we are discussing whether or not the national minimum wage should be applied to internships. My argument is that, if it is, there will suddenly be a contraction—a fairly major contraction—in the number of internships offered by SMEs, which make up the bulk of employers in my constituency and in many others. My point is specifically about employers’ ability to offer internships and the opportunities that will be available. We do not want to choke off opportunities. Yes, some internships are offered by big corporations and big employers who can afford the cost, but many more internships are short term—perhaps for only a few weeks or even a few days—and in small and medium-sized businesses. That will absolutely be the case in my constituency. These small businesses take on interns almost out of a sense of duty to their local community. I fear that if we mandate the extension of the national minimum wage to internships, the number of opportunities available to young people and the work experience opportunities offered to my constituents will sadly and inevitably decrease. As I say, that is an unintended consequence of the Bill.
In my view, allowance should also be made for a short internship that does not mandate any remuneration. Long-term internships are good, and there are many professions in which they happen. Short internships, though, sometimes literally of a few days, are far more numerous and are more often offered by small businesses. That is the case in my North Devon constituency, where the overwhelming majority of internships will be very short—only a few days or perhaps a couple of weeks. Very few SMEs in North Devon will have the capacity to offer a longer internship, and they would be further prevented from doing so if they were mandated to pay the national minimum wage.
Many people, particularly young people, in my constituency are offered internships because of the employer’s desire to help the individual to get on rather than to use their labour. As I say, it is almost a community scheme, and in a place such as North Devon, it operates in a way that is very healthy for society and for that sort of community where we sometimes feel that we are a long way from everywhere else—albeit that we in North Devon are, I like to think, our very own small economic powerhouse.
This contrasts starkly with longer-term internships that are often found in many professions that are prevalent in big cities. Of course, if someone in my constituency wants to take up one of these internships, it will come at a greater cost, not least because of the travelling costs from North Devon to one of the big cities. I fear that the Bill does not distinguish between the short-term internships offered by small companies and the longer-term internships in large cities, where the costs for the individual will be higher, but the large corporation will be better able to pay the national minimum wage. I fear that an effect of the Bill might mean many of the short-term internships currently offered by small businesses in my constituency will not be offered in future, thus reducing the available opportunities to my constituents. That is not something I want to see, and I am sure it is not something that my hon. Friend wants to see either, but I fear that, should the Bill proceed, it might be one of the unintended consequences.
My hon. Friend is making a case that many others have made today. It is unfortunate that, when I was drafting the Bill, the advice I was given was that the 28-day provision was unenforceable. However, if my hon. Friend were minded, by some miracle, to allow the Bill a Committee stage, I am sure he would like to join that Committee, and perhaps table amendments to meet those needs.
That is a very kind offer, and one that is almost impossible to resist. It is possible that I shall not need to “RSVP” in about 29 minutes, but we shall see.
My hon. Friend and others have expressed a fear that there is currently some exploitation: that businesses are taking advantage of those who should be valuable work-experience interns, and using them to do as much work as many of their other employees while getting away with not paying them. It is certainly not acceptable for an employer to use an unpaid intern as just another worker carrying out the same task as others while not being paid, but I fear that my hon. Friend’s Bill will not solve that problem.
The Government have done some work in this regard. This year, for instance, they increased HMRC’s enforcement budget by £7 million. It is important for staff to be paid the appropriate amount for the work that they do, and for that payment to be properly declared. We must ensure that internships are not used as a way of circumventing national minimum wage legislation.
Reference has been made to the position of charities and voluntary organisations. Because I have a copy of the House of Commons Library’s excellent briefing, I am aware that the National Minimum Wage Act 1998 already
“provides an exception…which enables a limit range of organisations (e.g. charities) to enter contractual relations with volunteers without necessitating payment” of the national minimum wage. That is to be applauded, because many charities and voluntary organisations in the third sector rely on the good will of volunteers to come and do the work that is so necessary in that sector. It would be entirely wrong for those excellent organisations to be mandated to pay the national minimum wage to volunteers. That could have a serious impact on their important work.
According to the House of Commons Library briefing—I think that this is a masterful example of understatement—
“This area of the law is notoriously complex.”
I fear that, sadly, the Bill may do nothing to ease that notorious complexity. I think that we need to look carefully at other ways of closing some of these loopholes if we wish to extend some of the very noble efforts that my hon. Friend has been making so far.
I applaud my hon. Friend, for the aims of his Bill are noble, but I do not think that making the national minimum wage mandatory for workplace internships is appropriate. I fear that it will have the unintended consequence that I have described: that it will have an impact on the availability of internships and the capacity of small and medium-sized enterprises such as mine in North Devon to offer opportunities to young people. It is important that they are able to offer those opportunities, and that young people are able to take them up, so that we can ensure that our Government’s priority and ambition to deliver a country that works for everyone is fulfilled.
We have had a good debate, full of insight and good humour and I warmly congratulate my hon. Friend Alec Shelbrooke on all the work he has done examining the issue of unpaid internships and introducing his Bill today. Indeed, so rich was the debate that it is impossible to do justice to all the excellent contributions. My only disappointment was that my hon. Friend Mr Rees-Mogg tantalised with his presence but confined his remarks to a few pertinent points, rather than giving us the benefit of the full panoply of his views on the matter. That was left to my hon. Friends the Members for Shipley (Philip Davies) and for Bury North (Mr Nuttall), who did not disappoint, and neither did my hon. Friends the Members for Louth and Horncastle (Victoria Atkins) and for North Devon (Peter Heaton-Jones). We have also heard some very good points from Gill Furniss.
Those of us who have worked with my hon. Friend the Member for Elmet and Rothwell know that he is a tireless campaigner for interns’ rights. He made a personal pledge to act on unpaid internships and this Bill represents only the most recent stage in his impressive campaign to secure fairness of opportunity and equity of consideration for all entrants to the labour market regardless of their personal means or social background.
The principle lying behind and driving my hon. Friend’s efforts is the idea that work can be a powerful engine for social mobility, and the Prime Minister, who talks about her vision of a truly meritocratic Britain and building an economy that works for everybody, is very much of the same mind.
I want to take a little time to talk about the Government review set up by the Prime Minister at the beginning of last month. It will be headed by the chief executive of the Royal Society of Arts, Matthew Taylor, and is to look specifically at developments in modern working practices. I also want to speak about the national minimum wage and the living wage, and a little bit about Government enforcement through the HMRC. I also want to address the provisions set out in the Bill.
First, let me make a few remarks about internships in the broader context and share a few points from my constituency experience. I have changed the names of the people I shall mention. The first of them is Susan. She was educated at a well-known public school. Her father was chairman of a public company and a donor to one of our two major political parties. He effected an introduction to the party chairman which resulted in a six-month unpaid internship for Susan at the party’s headquarters, and from the contacts she made there she was able to secure a second unpaid internship for a Member of Parliament.
The hon. Gentleman takes my example a little too far, but one can only imagine such an outcome as being highly likely.
Now, let me introduce Jack. Jack’s father works for a landscape-gardening company and just about makes average earnings, and his wife works part-time as a carer. As a family, they are just about getting by and they think Jack will get on fine because he is a bright boy. But Jack is already disadvantaged by some of the choices he made at GCSE which ruled out the sort of A-levels the Russell Group universities favour. He has no contacts in London and his family cannot afford to support him through an unpaid internship. Unlike Susan I think Jack would probably be one of the 40% of young people my hon. Friend the Member for Elmet and Rothwell indicates would reject an internship if offered on an unpaid basis. Those case studies illustrate to me that my hon. Friend is really on to something in challenging the concept of unpaid internships under the conditions set out in his Bill.
However, we believe that good, worthwhile, genuine internships certainly have a part to play, alongside other routes such as work experience, apprenticeships, work placements and work shadowing, all of which we have heard a great deal about in our debate. I believe we all recognise that young people learning about the workplace, developing skills and getting training can produce networking opportunities in and of themselves. Employers can also benefit from fresh thinking and from finding potentially great new permanent employees to join their team in future.
There are many different types of internship. The Gateways to the Professions Collaborative Forum, for example, represents about 60 professional bodies. We have heard about the excellent programme of paid internships that is run from the Speaker’s quarters in this House. In the attempt to define high-quality apprenticeships as an arrangement whereby individuals work and can gain some compensation, there is also the prospect that they will develop professional skills and an understanding of a profession. Those are all good experiences and we would not want obstacles to their fulfilment to be created unnecessarily from any unintended consequences of legislation.
There are many excellent resources, such as the Government-backed graduate talent pool, which is an initiative designed to help new and recent graduates to gain real work experience across Government. It advertises quality internships with a range of desirable employers in numerous competitive sectors. Most significantly, 100% of the vacancies advertised through the graduate talent pool are for paid positions. A 2011 survey of more than 500 people registered with the pool found that over 60% of respondents were motivated to join in order to improve their long-term prospects and gain general work experience, and it showed that over 80% of interns would recommend the experience and scheme to others.
Another example is the popular RateMyPlacement website, which I heard my hon. Friend the Member for Shipley mention—I think in relation to some experience he offered to a young person from his constituency. Graduates and interns can share their experiences of placements anonymously on the site and often find specific guidance on such things as interviews and general careers advice.
There is an increasing wealth of information out there, for employers as much as anyone else, about what well-managed, high-quality internships look like. However, we all know that not all the internships we are debating today are good quality and properly managed, and I think we all, across the House, aspire to improve our system such that there ends up being just good-quality, preferably paid—and certainly compensated—internships in future.
Let me turn to the point that several hon. Members have made: that workers do have rights. Workers have a contract with their employer under which they perform work to agreement and both parties must get something of value from the arrangements. The contract does not have to be written and the value provided to the person performing the work might initially be the opportunity to gain experience or the promise of future work. Other factors to consider are whether a person has the right to send someone else to do the work and whether the person is better viewed as working for the employer rather than being engaged by an independent contractor.
A genuine worker has a “day one” right to be at least paid the appropriate national minimum wage or the national living wage if he or she is over 25. When a court looks at a person’s employment status, it will always consider the reality of their working arrangements and not just how those are described. Simply labelling someone as an intern is not enough to exempt them from the rights associated with being a worker.
However, there is no universally agreed or accepted definition of the term “intern”, despite many attempts to define it today. I sensed considerable sympathy for the view expressed by my hon. Friend the Member for Bury North that it was perhaps a glorified Americanism used to describe what is effectively work experience. We must acknowledge that there are bad examples of work experience and internships, but let me make it absolutely clear that the Government believe that all people in the UK are entitled to fair wages for fair work.
If we complicate this too much, is there not a danger that employers trying to avoid having someone classified as a worker would simply get people in to do menial things such as making the tea, rather than doing a proper job? Most people who do work experience really appreciate being able to muck in and do something worth while. It would be a strange state of affairs if employers were deterred from offering meaningful work experience lest they fall foul of the legislation.
I thank my hon. Friend for his apposite intervention. I agree that it would be most deleterious if employers were to downgrade the work experience that they offered, to get round the law. I must point out, however, that the alternative might be that employers would start to compensate the person undergoing the work experience if they were doing genuine work that added value to the firm or organisation in question.
I take the point that my hon. Friend the Member for Shipley made earlier that, in the early stages of work experience, the candidate is often not in a position to add value to an organisation, given that they are learning on the job. Indeed, he told the House that he had been such a candidate in his younger days, working for the best local newspaper in the country—namely, the Stourbridge News. He talked about his experience as a budding court reporter, although he was modest enough to say that his material often required a degree of rewriting before it made it into the newspaper. That underlines his point that it takes a while for interns and people on work experience to be able to add value. I hope that, at the end of his work experience week, his employers took him to one of the town’s many wonderful hostelries for a few pints on a Friday evening.
The Bill seeks to extend the provisions of the national minimum wage to cover individuals who are engaged in workplace internships. It is extremely well intentioned, but I am concerned that it could have unintended consequences that might even undermine existing employment laws and protections. Legally, the Bill is unnecessary because, as my hon. Friend the Member for Bury North and others have said, interns are already eligible for the national minimum wage if they meet the definition of “worker”. It does not matter what the employer calls the arrangement or whether the individual has agreed not to be paid. Only the reality of the employment arrangement matters, and if an intern is a worker, they are entitled to be paid.
We have heard observations about the difficulty of defining the term “intern” in relation to various categories of unpaid work experience. The term is loosely used to apply to a wide range of formal and informal arrangements where there is an expectation of an individual receiving some kind of practical experience. A worker is someone who has a contract with their employer under which they personally perform work. For such a contract to be valid, both parties must be getting something of value from the arrangement. That could pose a problem for interns working for free if they are not getting paid but are getting something of value from the arrangement. Whether they are is not always clear cut. In most cases, however, the answer is likely to be yes. The value may be in the form of training, experience or a job in the company or organisation to which they are lending their labour.
For that reason, we feel that interns are afforded sufficient protections by existing employment laws and that a tribunal would find that an intern who was genuinely a worker would qualify for the national minimum wage. Indeed, tribunal decisions involving interns have reached that conclusion, including the case of Keri Hudson mentioned by my hon. Friend. HMRC has also identified arrears in a several cases that started out as complaints from interns. We heard some interesting remarks from my hon. Friend Victoria Atkins about the days when she was a prosecution barrister for HMRC. As she will know, HMRC follows up every complaint it receives.
I recognise that some people, interns in particular, will be worried about future employment prospects if they make a complaint, but I want to make everybody aware that anyone who contacts the ACAS helpline will be treated with strict confidentiality. Anyone whose complaint is referred to HMRC directly will also be treated with absolute confidence. People can choose how much information about themselves to disclose. It is even possible for someone to raise a complaint to be followed up by HMRC without even disclosing their identity. Safeguards are in place, and I urge all MPs to make employers, employees and interns in their constituency aware of their rights and the ease with which they can raise complaints without jeopardising their future employment prospects.
My hon. Friend points to a good exception to what I have been saying. If someone is the only employee in a business, it would be a microbusiness. I would imagine that most people who become an employer’s only employee are family or friends. I accept that such a case could exist and what I said would not apply in those circumstances, but I am sure that my hon. Friend will agree that such circumstances are exceptional. I can accept that there will be circumstances in which people will fear being exposed even if their confidentiality is maintained, so I accept my hon. Friend’s wider point.
If the Bill does proceed to Committee, I ask my hon. Friend to assure the House that it will not have a negative impact on the excellent support offered to disadvantaged young people by organisations and groups such as the Social Mobility Foundation. Short-term work placements, which may go beyond the 28 days mentioned earlier, offer risky and ultimately untenable situations for employers, establishing legal obligations towards participants that none of the parties involved either intended or wished for. I fear that my hon. Friend could not offer that guarantee, as indeed the Government could not were they to introduce something with the broad definition contained in the Bill.
We have heard that unpaid internships are disproportionately filled by people from affluent backgrounds, and I do not dismiss that concern in any way. Indeed, the examples I gave the House earlier about Susan and Jack underline that if we seek to legislate too readily and expand the scope of existing protections too freely, we may end up legislating some existing opportunities out of existence, because employers will not want the risk or nuisance of offering them and putting themselves into an exposed position that their conduct does not really deserve. If there are fewer internship placements as a result of the Bill, will we really have addressed the social mobility problem that lies behind it? I do not think so, and I sense that a number of my colleagues, not least my hon. Friend the Member for Shipley, would agree with me.
A better approach will be to take the opportunity afforded to us by the recently announced Taylor review to look carefully at modern employment practices and to gather evidence to see how we might best direct our efforts to improve fairness of opportunities and consideration for all entrants to the labour market, regardless of their background and whether they have the means to support themselves through unpaid work of any description. As a result of the Bill, I intend to ask Matthew Taylor to look at these questions with respect to interns, and I hope to persuade my hon. Friend the Member for Elmet and Rothwell to lend his considerable experience and credibility to any discussions he may be invited to have by Mr Taylor and the panel members who will assist him in this valuable work, the fruits of which I look forward to seeing.
As the Prime Minister has said on numerous occasions, the Government firmly believe in creating an economy that works for all. We support enterprise but not at the expense of employment rights, wages or job security when job security is desired. Where interns are genuinely workers, they are entitled to all the same rights and protections as any other worker, including, importantly, being eligible for the national minimum wage if they are under 25 and the national living wage if they are over 25.
I take my hon. Friend’s point that, even though the law is clear on that matter, it is governing a great range of grey areas in terms of the nature of the work that people who are starting out on their careers are performing and whether or not they are work shadowing, gaining work experience or undertaking an internship, paid or otherwise. Those are not just grey areas; I would go so far as to call them a minefield for employers.
I wish to protect the vast majority of employers who have a good disposition. I have been one myself, and I know that several contributors to this debate are former business managers who employed people. Indeed, we are all employers in this House, are we not—even your good self, Madam Deputy Speaker? I hope that I may compliment you by saying that, knowing some of your staff as I do, I know that you are an exemplary employer. Those standards go for the vast majority of Members across this House, and the vast majority of employers outside it are very good employers. Unfortunately, a minority are not, and we have heard some scandalous examples today of employers who are using the internships system to get free labour.
Appalling situations have been cited by a number of colleagues from across the House. Those examples are most regrettable and they underline the need that my hon. Friend has identified for us to act in this area, which is what I hope the Matthew Taylor inquiry will do. It will examine this minefield and clarify the conditions, so that we can ensure that interns, and employers’ good intentions, are protected and that all young people can get good experience without their employers falling foul of the law.
The debate stood adjourned (
Ordered, That the debate be resumed on Friday