Unpaid Work Experience (Prohibition) (No. 2) Bill

– in the House of Commons at 1:59 pm on 11 September 2020.

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Second Reading

Photo of Alex Cunningham Alex Cunningham Shadow Minister (Justice) 2:04, 11 September 2020

I beg to move, That the Bill be now read a Second time.

I remember that the first time I had a Back-Bench Bill, it took three and a half years for the Government to adopt the measures that I wanted, to ban smoking in cars with children present, but we got there in the end, and I hope that we will get there much sooner with this Bill. The world in which we now live has changed significantly since this Bill was first postponed from 27 March last year. We have lived through difficult times in the past few months. Everybody had to change their way of life to ensure that we took on covid-19 and protected the most vulnerable from this deadly coronavirus. That has highlighted just how fragile and complex many of our systems and procedures are. I was personally inundated with inquiries from all corners of my constituency of Stockton North, from small business owners to zero-hours contract workers, from furloughed workers to those who have recently been made unemployed. It has been tough navigating this, and I commend everyone involved in the effort to respond to covid-19.

Enhancing workplace rights and how we value work now could not be more important. Young people in particular have faced difficulties and problems that they should not have had to face. On top of the world feeling upside down, the experiences of the young person during the coronavirus crisis have been significant: prevented from seeing their friends and family for months on end; half a school year missed, which is a huge part of their development; and fewer job and training opportunities due to the challenges that covid-19 is giving employers and providers.

Research conducted by the Sutton Trust found that almost half of current undergraduates believe that the pandemic has had a negative effect on their chances of finding a job. The pandemic has also led to 61% of employers offering work experience placements having to cancel those at short notice. Unfortunately, that is likely to push some people into undertaking unpaid work to try to get ahead and getting into debt before they receive their first wage.

This is not how we should envisage young people getting on to the employment ladder, yet 39% of graduate employers say that they expect to hire fewer graduates or none at all in the next 12 months. What a dire job market young people are entering into right now. This is even more reason why we should remove the ability for employers to exploit eager and desperate young people who feel that they have to work for free in order to secure a properly paid job.

Photo of Stephanie Peacock Stephanie Peacock Shadow Minister (Environment, Food and Rural Affairs)

I congratulate my hon. Friend on bringing forward this incredibly important Bill. Is it not simply the case that many middle-class families, or those with money, can afford for their kids to do unpaid work experience? It is completely unfair when we consider that many families across Barnsley and across the UK just do not have that opportunity. If the Government are serious about their levelling-up agenda, they should support his Bill today.

Photo of Alex Cunningham Alex Cunningham Shadow Minister (Justice)

Indeed, that is very much the case. I shall develop my argument as I go and I will cover many of the points that my hon. Friend has actually mentioned. She might be interested to know that I had an email overnight from a father who told me that, during Fashion Week, young people actually pay the fashion houses to get the experience of working with them at that time—so we are talking about not unpaid work, but paying for the privilege to have that experience.

Perhaps the Government should consider what additional action they need to take to encourage businesses to continue to offer more properly paid roles for those entering the job market, otherwise it will be the already wealthy and well-connected who continue to have that elite access to jobs and experience while their less affluent counterparts struggle with a lack of those connections. In any event, as my hon. Friend said, they cannot afford to do the work for nothing.

Photo of Dehenna Davison Dehenna Davison Conservative, Bishop Auckland

I hope that the hon. Gentleman and those on the Conservative Benches will welcome the Government’s intervention on the kickstart scheme, which offers paid placements—paid jobs—for people right across our country to try to stop young people from going into long-term unemployment. I hope he will welcome that.

Photo of Alex Cunningham Alex Cunningham Shadow Minister (Justice)

I most certainly do welcome it, but, sadly, it has got off to such a chaotic start that I really worry about how those job creations will actually happen. Yes, let us make it happen, but the Government need to look very carefully at the very poor start that we have made with that particular programme.,

I am pleased to put forward this Bill to tackle one area of employment that can be exploitative and unjust. This Bill seeks to ban unpaid work experience that lasts more than four weeks. Before I continue, let me thank those who have helped me get this far with the Bill: the Sutton Trust for its insight and support in providing me with the guidance and information that I needed to confidently bring this Bill forward; Alec Shelbrooke for having brought an almost identical Bill to the Commons during an earlier Session: and, finally, the Conservative Lord Holmes, who currently has a parallel version of this Bill laid in the other place. Much work has been done on this issue in the past, and I am grateful for the support and perseverance of those who have been long-term campaigners for this cause.

We often hear today, from young people in particular, of those applying for jobs being told that they do not have enough experience, yet the opportunities to get that experience are often closed off. Jobs are either unadvertised, given to friends of the organisation, or somebody who knows somebody else’s dad, or advertised as unpaid roles, which means that only those with existing wealth to pay for the cost of living can apply.

Photo of Kevin Hollinrake Kevin Hollinrake Conservative, Thirsk and Malton

The hon. Gentleman is outlining some circumstances that he is right to address, but there is another side of the coin. In our business, we have often advertised a job and had a number of applicants, some of whom, despite being unsuccessful, have then contacted us—not through their father or another contact—to ask whether they can do some work experience to understand more what the job is about. We have done that, and those people have ended up getting jobs in our organisation. Are not some types of work experience a route into work?

Photo of Alex Cunningham Alex Cunningham Shadow Minister (Justice)

The hon. Member is totally correct, but people do not need to work for six months, 12 months or longer to get work experience. Four weeks will be sufficient in the organisation that he once ran to get that experience and build towards a new job.

Every party in this House claims to be the party of social mobility. Today Members have an opportunity to stand up and prove that theirs is the one that believes in that area of activity. If they are advocates for social mobility, I hope they will stand up to organisations that exclude those from poorer backgrounds from opportunities because they cannot afford to live without pay.

But this is not just about exclusive opportunities for those who can afford to take unpaid roles. Having people work for months on end without pay is exploitative, even when they are prepared to work for nothing. I am aware that some Members have argued that banning unpaid work experience would simply mean that organisations would stop offering opportunities altogether. First, for me, organisations not offering unpaid roles at all is preferable to them offering them exclusively to a distinct group of people. Secondly, if there is a real job to be done, organisations will find the money to pay someone to do it. Just because there are plenty of young and eager people, that does not mean that organisations should choose to save money by bringing in someone to do a job unpaid under the guise of work experience. Surely a young person does not need to work for six months or a year to get experience of a workplace or to learn a little of how a particular field operates.

But what does the employer or the organisation get out of it? It is quite clear: they get free labour, expecting a full day’s work without a full day’s pay. They save themselves a salary. They also save themselves national insurance and pension contributions. Surely it would be fairer for everyone if we limited such work experience placements to a month. Even the Exchequer could benefit. Such a move would ensure that living costs do not stack up, putting people further in debt, and would enable those opportunities to be offered to more people. A six-month unpaid placement could instead be offered to six people instead of one.

Photo of Mike Wood Mike Wood Conservative, Dudley South

I am pleased that the hon. Gentleman recognises the value of short work experience placements, but does he also recognise that sometimes such placements are better structured for both sides, perhaps on a part-time basis or even for one day a week? That means that, although they are probably still rather less than 20 days in total, they can last for significantly longer than four weeks. Is there not a danger of their being caught by his Bill?

Photo of Alex Cunningham Alex Cunningham Shadow Minister (Justice)

Maybe my Bill should limit the length to 20 days with one employer—it all amounts to the same thing—but the hon. Member is right: a young person could gain experience over a period of time. If he supports my Bill, perhaps we can amend it to take on exactly that point.

The only way that we will crack down on this practice is by limiting the amount of time that someone can do unpaid work experience for one organisation.

Of course, there are already rules around the definition of a worker, but the Sutton Trust carried out some excellent research that found those rules are not as clear to organisations and those carrying out their work experience placements as we would hope. For example, it found that half of young graduates are unaware that unpaid internships are illegal—yes, they are already illegal—in most circumstances. This is a significant problem as the current system relies on young people to self-report any unpaid internships that they suspect are illegally not paying the minimum wage. That puts those young people in an incredibly difficult position.

Photo of Alex Cunningham Alex Cunningham Shadow Minister (Justice)

No, we are running out of time.

Information received through a parliamentary question in June shows that since 2007, Her Majesty’s Revenue and Customs investigations have led to just 15 successful prosecutions of employers for national minimum wage-related offences, but there have been no prosecutions relating to internship cases despite more than 150 complaints received by HMRC from workers undertaking unpaid internships. And that is before we consider the large number of people who do not know they are illegal and are working for months on end under the illusion of it being work experience.

The Bill clarifies and tightens current legislation and ensures that those on unpaid work experience placements are not being exploited. One of the best ways to do that is to limit the length of time of a placement in law. A six-month unpaid internship will cost a single person living in London a minimum of £6,300, and in Manchester £5,300, just to fund their own placement. Not only are they not being paid, but their living expenses can put them into serious debt before they even get their first proper job. That is not a system that we should be advocating. One we could advocate is Mr Speaker’s own intern scheme, which ensures that the young person taken on is paid the London minimum wage, or the local minimum wage. We should encourage organisations to replicate Mr Speaker’s scheme. I would like to make it clear that the Bill does not apply to placements where a university course requires it. These are often unique circumstances in which the student is funded through other means, so it is not affected by my Bill.

Moving towards a conclusion, we in this place must first look to ourselves and recognise that Parliament needs to take a lead. It is a significant statistic that 31% of Westminster staffers have worked for an MP without being paid. How are we supposed to set the example when many MPs in this House think that having people work for us for months on end with no pay is even the slightest bit satisfactory? Out there, thousands of employers are offering such placements under the guise of work experience and most of them do not even know they are breaking the law.

The Sutton Trust found that up to 50% of employers thought most unpaid internships were perfectly legal. Many others were not so sure. We need to take the ambiguity out of this. We must make sure that the rules are not open to misinterpretation. We need to be firm and make it clear that long-term unpaid internships are not permitted. We need to ensure that those who can afford to work for free are not given a step on the ladder ahead of their less affluent peers. We need to make sure that young people are not being exploited by organisations that should be paying them a wage. We need to make sure that social mobility is a reality in this country. Passing the Bill will help in all those areas. It is simple, it is straightforward, and it provides the clarity needed by both young people and employers.

I would like to end by reminding the Government about their prior commitments. The response of the Government to the Taylor review of modern working practices was that they would introduce new guidance and increase targeted enforcement activity to help to stamp out illegal and exploitative unpaid internships, but they have not. When he served as Mayor of London, the Prime Minister said that he wanted to tackle unpaid internships. The Prime Minister also said on 25 July last year that he backed this exact Bill in the name of the right hon. Member for Elmet and Rothwell. Now, however, it seems that instead of backing it, he has backed out.

Government Members have a choice today: back the Bill and work to thrash out the minor details, if necessary, in Committee. Take a stand today and acknowledge that we have not done enough to eradicate exploitative working practices and that the Bill makes the move to right the wrongs. All colleagues here should be aware and think of the teenager in their constituency who works hard but, because of a low socioeconomic background, cannot work for free. Help that teenager get on the ladder for a change. Many young people from poorer backgrounds face challenges that many of us in this House could not even imagine. Let us take down one more barrier in their way. Let us take one step further to improving access to the workplace. Let us end exploitative, unpaid work experience or internships once and for all. I commend the Bill to the House.

Photo of Nigel Evans Nigel Evans Deputy Speaker (Second Deputy Chairman of Ways and Means)

The Minister has indicated that he would like to speak next. That does not end the debate. Should he sit down before 2.30 pm, other Members will be called.

Photo of Paul Scully Paul Scully Parliamentary Under-Secretary (Department for Business, Energy and Industrial Strategy), Minister of State (London) 2:20, 11 September 2020

I congratulate Alex Cunningham on his success in the private Members’ Bill ballot. Clearly, there is not a lot of time to respond to the detail, but I want to cover a couple of areas to show this issue the respect it deserves. I will mention one or two specific issues before I get on to the substance.

The hon. Gentleman talked about Members of this place taking on people and, as he rightly pointed out, the distinction that gets blurred between volunteers, interns and those on work experience. It is an uncomfortable truth, which we need to sort out ourselves. The W4MP—Working for an MP—website, from which some colleagues on both sides recruit their staff, states that, as a response to such campaigns in recent years, it does

“not generally accept adverts for work that does not pay at least the current rate of national minimum wage/national living wage”.

The exceptions include adverts for volunteers for political parties, including voluntary work for MPs, and any ad accepted for an unpaid role will include reference to its being voluntary. When we did a search for interns on that website, it showed 11 jobs that were all paid. A search using the term “unpaid” found no results and, similarly, “voluntary” and “expenses only” found zero results. We cannot be complacent and we must make sure that we are leading from the front, as he said.

The hon. Gentleman talked about national minimum wage prosecutions, and I think he was specifically talking about this aspect. However, in general terms of prosecutions—to update the House—there are currently seven cases at various stages of the criminal investigation process involving not paying the national wage across the board, although not necessarily in the field that we are talking about. Her Majesty’s Revenue and Customs, which tackles this, has issued seven labour market enforcement undertakings this year. Since 2007, 15 employers have been successfully prosecuted for underpaying the national minimum wage. Prosecution tends to be reserved for the most egregious breaches of national minimum wage law. In most cases, it is not necessarily the best approach to help workers. Criminal sanctions against companies can mean that workers, the ultimate beneficiaries of enforcement, end up waiting considerably longer for their lost earnings to be paid back.

I agree wholeheartedly with the hon. Gentleman that it is wrong to exploit workers through unpaid work experience, including internships. The rights of workers to be paid at least the minimum wage must always be upheld. An individual’s entitlement to the minimum wage depends on whether they are deemed to be a worker for minimum wage purposes. If someone is deemed to be a worker, their employer must pay at least the relevant minimum wage rate from their first day of employment. I will come back to this if I have time, but I should like to provide reassurance that most internships or work experience placements are likely to constitute work, and therefore individuals are likely to be deemed to be workers who are entitled to be paid at least the minimum wage.

Photo of Alex Cunningham Alex Cunningham Shadow Minister (Justice)

I know we are short of time, but I would ask the Minister two things. First, will he work to raise awareness among employers that a lot of their activities are actually illegal through not paying the national minimum wage? Secondly, will he look at the fact that many complaints have been made but no prosecutions or action taken when students have objected to work experience being unpaid?

Photo of Paul Scully Paul Scully Parliamentary Under-Secretary (Department for Business, Energy and Industrial Strategy), Minister of State (London)

Indeed, we do work on both enforcement and awareness, but it is right that we continue to look at how much more we can do, including in making sure that employees and workers themselves are aware of what they are entitled to. Each year, as we address and set the minimum wage, we always have a campaign about that. It is important that we contact, yes, employers to remind them of their legal duties, but also workers to make sure they are aware of their own rights. That is absolutely key.

Photo of Stephanie Peacock Stephanie Peacock Shadow Minister (Environment, Food and Rural Affairs)

Since 2013, it had been Government policy to name employers who break the national minimum wage law. The naming scheme was suspended by the Government last year. Can the Minister tell the House whether that is back up and running, and if it is not, when it will be?

Photo of Paul Scully Paul Scully Parliamentary Under-Secretary (Department for Business, Energy and Industrial Strategy), Minister of State (London)

The naming scheme is something that we did bring in, and we are keen to reinstate it—it obviously has been postponed at the moment—up to its full potential. We are working with employers and sending out tens of thousands of letters to employers to remind them of their obligations, but we will certainly be returning to the naming scheme in due course.

It is important that we recognise that internships offer an important opportunity for young people to gain experience and improve their career prospects, and that is why young workers tend to be more likely to accept unpaid internships. Minimum wage legislation provides for a number of exemptions that recognise the importance of gaining work experience. Those clearly defined exemptions include: students on placement for up to one year as a required part of a UK course of further or higher education; pupils of compulsory school age; participants in certain Government programmes to provide training, work experience or temporary work; and, voluntary workers volunteering for a charity or voluntary organisation. All other internships are likely to constitute work for minimum wage purposes, with the individual entitled to be paid at least the minimum wage.

Photo of Nickie Aiken Nickie Aiken Conservative, Cities of London and Westminster

Does the Minister agree that it is important from a work experience point of view to consider younger children? When I was leader of Westminster City Council, I introduced the Westminster Lions scheme, which targeted 13 to 15-year-olds. That was about giving them experience not necessarily in the office, but of talking to employers and sectors about potential career opportunities for teenagers, ensuring that they could make the right career choices as they went to college and further education.

Photo of Paul Scully Paul Scully Parliamentary Under-Secretary (Department for Business, Energy and Industrial Strategy), Minister of State (London)

I commend my hon. Friend for the work that she and Westminster City Council have done in this area, because it is so important to give opportunities. I will talk a little bit about social mobility, which is the point of what she did. Certainly on this side of the House, we like to remind ourselves that we are the party of opportunity. It is all about creating opportunities and making sure that everybody in this country—whatever their background, their family situation, their housing situation, their gender, creed or race—can grab hold of those opportunities and fulfil their potential.

That is why the Government share the concern expressed by organisations such as the Social Mobility Commission and the Sutton Trust, to which the hon. Member for Stockton North referred. Unpaid internships are a barrier to social mobility, for the reasons that he gave. I am also aware of the Sutton Trust report “Pay As You Go?”, which was published in November 2018. It recommended legislative changes to ensure that all internships longer than four weeks require payment of at least the national minimum wage.

In some sectors, such as the creative industries, unpaid internships have been seen as a key step to gaining experience in order to secure paid employment. However, the Government are clear that internships must not be used as a pretext to avoid paying qualifying workers the minimum wage, and that is why the Government’s focus has been on enforcing existing minimum wage legislation that protects workers’ rights to receive at least the minimum wage from day one.

Matthew Taylor considered unpaid internships in his review of modern working practices published in July 2017. He agreed that exploitative unpaid internships that damage social mobility in the UK should be stamped out. However, he argued that should be done by clarifying the interpretation of the law and by encouraging enforcement action by HMRC. He also argued that a separate intern status in employment law was unnecessary as the law was clear as it stood.

When enforcing the national minimum wage regulations, HMRC inspectors will consider the precise details of each case, such as internships or work experience, including what the worker is being asked to do. As I have indicated, entitlement to the minimum wage depends on whether someone is a “worker” in defined terms. Being a worker depends essentially on whether there is a contract—written or oral and expressed or implied—to work or perform services for a reward.

Most internships or work experience placements are likely to constitute work, as there will be some form of legal consideration, in that the parties have each agreed to do something or to provide something. On the employer’s part, that could include expenses, the promise of an interview or the promise of future work. Where HMRC comes to the view that arrangements constitute work under the minimum wage regulations, it will require the employer to repay any arrears to the worker and it will impose a penalty for underpayment. Even though interns are not defined in minimum wage legislation, they are generally already protected as workers and therefore already entitled to be paid at least the minimum wage from day one. It does not matter whether an individual is described as an intern or as on work experience; they still have that entitlement from the day they start.

That leads me, in the two seconds I have left, to the Bill.

The debate stood adjourned (Standing Order No. 11(2)).

Ordered, That the debate be resumed on Friday 25 September.