Unpaid Work Experience (Prohibition) Bill [HL] - Second Reading

– in the House of Lords at 11:09 am on 27th October 2017.

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Moved by Lord Holmes of Richmond

That the Bill be now read a second time.

Photo of Lord Holmes of Richmond Lord Holmes of Richmond Conservative

My Lords, I thank all noble Lords who have signed up to speak in the debate and I look forward to hearing their insights and considered views as we progress. I would also say to all Members in the Chamber and to the wider audience watching the broadcast that they can join in the debate by contacting me by email and accessing the hashtag “#PayInterns”. We want to keep the pressure up on this issue both within the House and right across the country through the use of social media. I thank all the organisations which have helped in the preparation of the Bill and for providing briefings for myself and other noble Lords. I thank the staff of the Public Bill Office in preparing the Bill itself, and in particular the Social Mobility Commission, the Sutton Trust and the fabulous Intern Aware, a campaign started by young people—including not least Ben Lyons who is one of the founders—who were at a stage in their lives when they were incredulous that it could be the case that people would be asked to do work for no pay in 21st century Britain. I should also like to offer my thanks to my honourable friend in the Commons, Alec Shelbrooke, whose assiduity—is that a word? It is now—on this issue over several years has played no mean part in my being able to bring forward the Bill before us today. As is often the case in the legislative process, I am standing on the shoulders of many individuals both within Parliament and far beyond.

Why do we need this Bill? In 2017, employment is at record levels and unemployment is at similarly record low levels. That is good, but what is not so good is that we are currently seeing a boom in unpaid internships, where young people and indeed people of all ages are being asked to give of their labour for no remuneration. The Prime Minister has said many times in various speeches that we want to be a nation that works for everyone. I agree with her, but the nation is in no sense working for everyone while we still see the perpetuation of pathways of privilege. They have nothing to do with merit and nothing to do with talent. The pathways of privilege are where people are able to secure unpaid work opportunities on the basis of being fortunate enough to receive family funding or, indeed, to have access to the family’s black book. If noble Lords doubt this, YouGov research clearly shows that only 4% of those polled said that they would be able to take on an unpaid internship with no financial difficulties. Wilberforce slammed the door on slavery in the 19th century; we had the national minimum wage legislation in the 20th century; how can it still be, in the fifth-richest economy on the planet in the 21st century, that we are still asking people to give of their labour for no financial return?

What does the current law say? It says that if there is a relationship between an individual and a firm with clear obligations, the individual is a worker and is entitled to the national minimum wage. The law is clear, so why are we having this debate? What is not so clear and easy to prove is that you are a worker who should get the national minimum wage. In fact, it is quite easy for businesses and employers to get around the legislation in a whole series of ways, and it is getting worse. Since 2010, unpaid internships are up and internships in general have increased by 50%. More and more professions and trades now require not only a degree and a vacation scheme, but unpaid work experience if someone is to have any hope of getting a job. Time and again, adverts ask for at least six months’ work experience. Never mind the quality of the individual and the quality of the degree that they have already attained. The situation is getting worse—an increase of 50% since 2010—at a time when successive Prime Ministers have been talking about social mobility and enabling talent.

Further research shows that 30% of graduates are reporting that they have had to do unpaid work experience with their current employer, a figure that rises to 50% in some professions. Half of the people in a profession will have had to do unpaid internships in order to get across the threshold. As I have said, 4% report that there is no financial barrier for them, which leaves 96% for whom clearly there is. Some 40% of people report that they have sought internships but have had to turn down the opportunity through a lack of financial means. I believe that the current situation, with these practices, can be summed up quite simply: “If you want pay, go away”.

Worse than that, some organisations representing businesses are offering template letters that enable organisations to take a route which avoids the national minimum wage legislation. As noble Lords, in particular noble and learned Lords, will be aware, all contracts are agreements, but not all agreements are contracts. As the current law is set out, there are many ways to avoid and evade the regulations. Perhaps even more problematic is that all of the onus is put on the individual—on the victim, if you will—to pursue a claim. How likely is it that someone who has undertaken an internship to try to increase their social mobility and build a career for the rest of their life will bring a case against an organisation? Yes, it is possible to do, as Sony, Harrods and others have found out. It is possible, but is it probable? Even if it is, is it likely to put an end to these practices?

I turn to the Bill itself. What am I seeking to achieve through this short Private Member’s Bill? The answer is simple: a prohibition on all unpaid work experience—please note the use of the term “work experience”—exceeding four weeks. This will bring clarity to the whole area. I am a massive fan of work experience, as seen not least in the 2016 report of the Social Mobility Select Committee, of which I was a member. Work experience has a fabulous impact on young people because it enables them to have their first experience of the workplace. They can learn skills as well as the rhythm and routine of work.

However, are we honestly saying that a period beyond four weeks unpaid is in any sense acceptable? When I began the preparation of this Bill, my start point was zero weeks. I felt that if someone is doing something that is of benefit to a business, they should receive remuneration for their labour. Having undertaken extensive consultation, a period of four weeks seems to be what we can agree on across the sector. It is acceptable in that it will not have any adverse impact on work experience opportunities, but it would put a clear stake in the ground and bring clarity to the position. After the four-week period, an individual will be unequivocally entitled to the national minimum wage; indeed, for clarification, they are entitled to that wage during the work experience period as well, in particular if they are working as an intern as opposed to doing work experience, being in a shadowing scheme or something of that nature.

The Bill would reverse the onus so that no longer would it be for the individual to bring a case; it would be for the employer to prove that the individual is not a worker. It would eliminate many of the difficulties in terms of bringing claims and the whole prosecution process. Moreover, it provides clarity for employers in terms of how to treat interns. How should you treat them? The answer is to pay them. I believe, too, that talking about pay empowers interns, whereas at present the subject simply cannot be raised—it is not in any sense within their grasp to bring it to bear because of the nature of the power relationship in which they find themselves.

It is fair for me to consider some of the arguments against such a measure. Perhaps small businesses believe that they would not be able to afford to pay interns. The Bill introduces a four-week period for work experience in which an employer can get to know the employee and the employee can get to know the employer, but after four weeks why should the person not be paid? Is the business saying, “We are unable to survive without the labours of that young person being given for free”? If that were indeed the argument, I think we would all draw some significant conclusions about the nature of that business, both economically and ethically.

However, the Bill is not so much about small businesses; it is more about the larger, more prestigious organisations that offer these schemes. Possibly most concerning of all is that some of these so-called prestigious unpaid internships are seen as better and more prestigious for the individual than if they had undertaken paid work experience or internships with a different employer. That could be an argument against my Bill. What about the view of bigger businesses? Sixty-six per cent—two-thirds—say that they are in favour of the four-week limit. I could cite many but, to pick one at random, KPMG says, “We have a culture that respects hard work”, but clearly part of that respect is shown by remunerating that hard work.

Some argue that the Bill will not increase opportunities but will simply mean that all these internships disappear. If they are able to survive only on the basis of people working for free, with only 4% of the population of that age saying that they can undertake them and 40% having to turn them down, I do not think that that will be a great loss. It would certainly be no drag on social mobility or advancement or on economic growth for this country.

I turn to a more interesting claim concerning volunteering. I have had a lot of representations from volunteer organisations. The Bill as currently drafted will have no impact on the great work that volunteers do for many different organisations and many parts of our society. However, I hope that it will stop long-term unpaid internships that some charitable and third-sector organisations provide. The aim of a charity may be incredibly laudable, but that end is never justified by the means of having interns who, often for many months, if not years, work for no pay. That is a quite separate matter from those who volunteer and freely give of their time to great charitable causes.

Therefore, the Bill is about fairness and equality. However, if neither of those two things float your boat, I argue that it is also simply about talent. As I have said, 4% of young people can undertake unpaid internships with no financial difficulty, but why would a business want to exclude 96% of the potential talent pool from their organisation? Surely any business would want to try to attract the brightest and the best.

I ask the Minister whether the Government will support the Bill. If not this Bill, what Bill? What action will they take to end the pernicious practice of unpaid internships? They are a pathway of privilege—a route into some of the best jobs and brightest professions of our time. Surely the role of government is to enable and empower. Surely if we want the best businesses, the best public sector and the best third sector, we as a society, and we as a Parliament, need to state very clearly that we are calling time on any organisation or business that asks people to give of their time for no remuneration.

I would like to raise with the Minister a number of other issues allied to the Bill, although in no sense am I offering them as alternatives. I believe that the Government should consider all these issues alongside, not instead of, the Bill. If the Bill were passed, the matters that I am about to raise would need far less government intervention.

The first is massively to increase awareness among employers not just of the current legislation but of the Government’s view that unpaid internships are no longer acceptable. The higher education and university sectors should be asked to do much more to educate and inform graduands and graduates about their rights. The current law states that, if you are a worker, you are entitled to the national minimum wage. You should not feel that you have to do, and you should not accept, unpaid internships because, even if you can, you are standing on the shoulders of others and holding this nation back.

Regarding the whole reporting and regulatory sector, I believe that there needs to be a massive increase in and widening of reporting in this area, not least enabling third parties to report. HMRC needs to look across all the advertising websites, newspapers and outlets. Many of these advertisements are in plain sight—they are right there, ready for HMRC to go after and put an end to. This was brought up in Matthew Taylor’s review published earlier this year, in which he clearly highlighted that he felt that, when it came to unpaid internships, HMRC’s powers were far from satisfactory. Does the Minister agree? Will he say when the Government will respond to the Taylor review and whether they believe that the review, as published, went anywhere near far enough?

There is then the whole question of penalties. When we are looking to increase penalties in a whole series of areas, it seems particularly pertinent to do so in this one. If you fell foul of the current legislation, you could be compelled to pay the wages that you should have paid. That would hardly be a penalty; it would merely be a case of doing what you should have done in the first place. Will the Minister consider looking at penalties? A dramatic increase in penalties in this area would be not only appropriate but a very positive step towards ending this practice.

I believe that there is a role for business—small, medium and multinational—to use their power and influence, and to state categorically in all their communications that not only do they not engage unpaid interns but they have no truck whatever with the practice. A key way in which they could do this would be through procurement, saying, “We will not procure from you if you use unpaid interns”.

Naming and shaming could be incredibly positive in this area and across all sectors, and it should start right here and right now in this Chamber. To Conservative, Labour, Liberal Democrat, Cross-Bench and Scottish nationalist Members at both ends of the Corridor, we should say, “If you use unpaid internships, you have no comment to make about progress, merit, talent or social mobility”. We have to lead on this. I ask my noble friend to comment on what is happening in Whitehall, where there have been clear illustrations of how progress can be made when there is a commitment to this matter.

I conclude not with my words, nor the words of briefing or of Ministers or previous Members, but with the words of perhaps the people we should be listening to most: those who have suffered unpaid internships. As somebody from the broadcast sector said, “You can’t pay the rent with a glowing CV. You can’t buy food with exposure”. Somebody else from television described these practices as “cruel” and “pointless”. Perhaps most pertinently, somebody from the creative industries said, “You begin to doubt yourself and your self-worth”. Quite so. That is the impact on many more people, who feel the shame and embarrassment of having been engaged in these unpaid internships, who feel as though they had no choice and really do not want to talk about, as they describe it, that “shameful episode” in their lives.

This is about empowerment, enablement, fairness, equality, dignity, respect and talent. This is for the hundreds of thousands of individuals who have in the past suffered the shame of unpaid internships; for the tens of thousands of people who currently find themselves in that same situation today; and for a better Britain of tomorrow. Let us not just give the Bill a Second Reading; when the time comes, let us give it safe, swift passage into statute. I beg to move.

Photo of Baroness Morgan of Huyton Baroness Morgan of Huyton Labour 11:31 am, 27th October 2017

I applaud the noble Lord, Lord Holmes, for bringing forward the Bill and for his brilliant speech. Frankly, I think he said it all for us.

I draw attention to my interests on the register. I should probably add a personal interest too: I have somewhat lived this subject since my son set up the campaign group Intern Aware—to which Lord Holmes referred—with a friend at university. My son is now 27, and still campaigning, so this issue has been going on for quite a while. It is interesting that the type of legislation needed has become crystal clear.

My more pertinent interests are these: I advise the education charity Ark, which has academies and free schools in London, Birmingham, Portsmouth and Hastings, all serving very disadvantaged communities. I also chair Ambition School Leadership, a charity that trains and develops hundreds of school leaders each year—from heads of departments through to senior leaders, head teachers, executive head teachers and CEOs of multi-academy trusts—in challenging schools, all serving poor communities and all working with disadvantaged young people.

I understand why the Bill is needed and how tough it is both to raise the aspirations of young people in many of these communities and to open up opportunities in a proper and fair way. At times, it almost feels as if every time progress is made and barriers are broken, a new barrier is erected, to make progress for disadvantaged students more difficult again. The new barrier, in the last decade or so, is unpaid internships. About a third of graduate internships are still unpaid and, as we know very well, some sectors of the economy, such as the creative industries and media, are particularly bad.

Some 62% of businesses take on interns. Many of those are in London; there are more in London than anywhere else. So what does that mean for someone living outside London, with no contacts or family or family friends who can help? We have all had briefings from the Sutton Trust, the Social Mobility Commission and others. I will not rehearse them all; we all know them. Suffice to say, as a country, we need all the talent we can develop.

What I love about the Bill is that it is simple, practical and pragmatic. I know those are not necessarily terribly popular things at the moment, in any of our parties, but often the best legislation ticks those boxes. What is clear is that the Bill does not confuse a couple of week’s work experience, which all of us would support, with an unpaid internship, which is where we have to take action.

In July 2016, the newly elected Prime Minister, Theresa May, said:

“We will build a better Britain not just for the privileged few”.

Here is a very simple, straightforward chance to do just that. This issue has gone on long enough. There have been enough reviews and enough prevarications. Will the Government sort it out?

In this House, on 11 March 2015, the then Minister, the noble Baroness, Lady Neville-Rolfe, in response to an amendment on this issue from the noble Lord, Lord Mitchell—who has also been dedicated to trying to sort out this issue for a long time—said:

“Internships are not formally defined and therefore the Government do not collect reliable information on a consistent basis that would allow the robust provision of data sought in the amendment. The Government have undertaken research on wider issues that may relate to internships, such as social mobility. We need to be properly informed of the issues around internships to ensure that policy is set appropriately to maximise flexibility and prevent exploitation. As part of our employment status review, the Government are gathering information through consultation with stakeholders to understand both the current position of groups in the labour market and whether future changes are appropriate. This includes internships and will no doubt provide useful information and data for future discussions … There must be more that the Government can do—that is why we have undertaken a review of employment status”.—[Official Report, 11/3/15; cols. 720-21.]

As we know, that review of employment status has now reported. In his review this year, Matthew Taylor said:

“There have been calls for a separate ‘intern’ status in employment law but we believe this is unnecessary … If a person is obtaining something of value from an internship, they are most likely to be a worker and entitled to the National Minimum or Living Wage. The Government should ensure that exploitative unpaid internships, which damage social mobility in the UK, are stamped out. The Government should do this by clarifying the interpretation of the law and encouraging enforcement action taken by HMRC in this area”.

We have had the clarity and the research and we have the data. This has gone on long enough. If the Government do not say clearly that they will sort out this unfairness, this ceiling on opportunity, we can collectively draw only one conclusion: it is all warm words. I look forward to hearing a clear response from the Minister.

Photo of Baroness Stowell of Beeston Baroness Stowell of Beeston Conservative 11:37 am, 27th October 2017

My Lords, I refer your Lordships to my entry in the register of interests. I am a board member of Impellam Group, a staffing and recruitment company. First, I congratulate my noble friend Lord Holmes, not just on introducing the Bill but on the way in which he began the debate. He made a very powerful speech.

A few months ago, I went to see a young theatre production at the Almeida, called “Bait”. It was put on by young people and about young people’s lives. The big message I took away from that production was that young people feel they are being lied to. It was quite shocking, but when you start to hear more about how they are treated in the world of work, then I do not think we should be surprised at all.

In preparing for my contribution, I spoke to a young man in his 20s. I have known him since he was born; I know his mother very well, and over the last two or three years, she has told me of his experiences in trying to find permanent work. I thought I would speak to him directly and learn more about the issue. Fortunately, he lives in north-east London, so has access to some of the great opportunities here, but does not come from a privileged background. If I say he spent his early life living with his mum in a bedsit with no central heating, you get the picture. He is a very creative and talented young man. When he talks about some of his experiences at proper, well-organised work experience placements, it all sounds pretty good, as though the placements were well designed. There were no problems. However, even in big corporates, when he has been with them for a week or two and they have promised to pay his travel and lunch expenses, after the event, they are not very forthcoming in paying that money. For some reason, when it is just £75 it takes a long time to materialise, if at all. Somebody like him does not feel well equipped to pursue that matter.

For the last three years he has been trying to get a permanent job. What he told me about that I found most concerning was things called work placements. These are the kinds of arrangements where firms will say, “Come and work for us, get some work experience and there might be a job in it for you at the end of a few weeks”. When I talked to him I asked him to send me some examples to illustrate the experience he has had. I will share with your Lordships some things he sent me. This is him speaking:

“A number of placements kept reassuring me that I would be paid after one month … but once the month was up I was given excuses as to why I had not been paid yet. You hope that by working for a month you will impress your employer and that you will start to be paid (this isn’t always the case)”.

Another example was:

“One office job promised me a full time role with pay and kept hinting that a certain position was available to me. I went to the office one day and was told I was being let go for no specific reason and was thanked for my work”.

He also said:

“Another placement hired me for nearly 3 months. I had worked overtime for them, including evenings, weekends and extra days. One day they stopped all communication with me. After some time had passed I contacted them as things had gone quiet and I wanted to know about future work. They never replied to me at all (no phone call, text or email) this was a production company and this is usually the norm of behaviour when it comes to communicating”, by the employer. He also said:

“I was also let down before a job had started with one particular company. I was promised an induction day followed by a week’s trial and training as an office receptionist. As the employer did not stay in regular contact, I emailed them the day before the induction was to begin to confirm the date and I was given a reply stating that the position had been filled. (If I hadn’t of contacted the company I would have turned up to my induction completely unaware of this).

Unfortunately when it comes to internships and pay nothing is ever given to you in writing. Most employers will only make verbal promises about paid work.

Most of my internships have been very frustrating, especially when you work hard and you prove yourself time and time again by demonstrating your passion, work ethic and commitment, but to no avail”.

I do not know about your Lordships, but I would find it hard to keep going if that was the way I was being treated time and again. I said to him, “Why do you keep going?” He said, “Well, I don’t really have much choice. You hope one day this will be the one so you keep going”. Our young people are being exploited and it is just not good enough.

That is just one person’s experience. He told me that his friends who are also trying to get into various different working environments and sectors have experienced the same thing. His experience is not unique. I do not know whether my noble friend’s Bill is the right solution to this problem. I will listen very carefully to my noble friend the Minister, but I do know that the current legal and regulatory regime is not working. Young people feel powerless. Because of that, our young people are being exploited. That has to stop.

I have one final point. Yesterday we debated intergenerational fairness. I made the point that one thing that unites older generations and the very young is their shared desire for honesty and clarity—from talking to my young friend I learned that you can understand why. One of the points he made repeatedly to me about his experiences was that the person he was usually dealing with when trying to get work was in their 30s or early 40s. He felt they had a very different attitude from his and the sort expressed by his parents and his teachers. We have to bear in mind that the generation that came before the one that is now trying to get work entered the workplace at a boom time in the economy. Our current youngsters are trying to get work in much tougher situations. The intergenerational gap of knowledge and appreciation is quite stark between this generation and the one just ahead of them, yet the one ahead of them is in control of giving them work. That is another thing that is not necessarily for my noble friend to respond to today, but it is something for us to reflect on when we think about wider issues.

Photo of Lord Mitchell Lord Mitchell Labour 11:45 am, 27th October 2017

My Lords, it is of course far fetched to refer to unpaid interns as slaves. They are not owned by anyone, they are tied to no master and they do what they do through personal choice—and they can quit whenever they choose. But in one respect unpaid interns have a comparison with modern slavery: they receive no payment for their labours. It is a practice that is immoral and needs to be stopped—and it is our duty to stop it. That is why, just like other noble Lords, I am immensely grateful to the noble Lord, Lord Holmes of Richmond, for securing this Second Reading. I wish him godspeed in progressing this Bill through Parliament. I also congratulate him on his magnificent speech.

My interests, which I declare, are pretty pertinent to this debate. I speak with some experience. I chair a graduate recruitment company called Instant Impact Ltd. Previously it had been called Instant Impact Interns, because in the early days back in 2011 most of our business came from placing interns with employers. I stress that every intern we placed was paid at the very least the minimum wage. Like many other start-up companies with limited cash, it would have suited our restricted cash flow very well if we could have employed in-house interns without payment—but that of course was never entertained. With two young founders who themselves were scarcely out of university, it went absolutely against the grain of everything the company stood for. I say this because yesterday I had lunch with somebody who invests in start-up companies that, to my absolute horror, employ graduates—even MBAs—who receive no payment as interns. When I expressed my shock, which he saw, he said, “Well, if we had to pay them we’d go out of business”. My answer was, “Then go out of business”.

Regretfully, I say that many of these start-up companies—not just commercial companies but charities and other organisations—do not take this approach. To our shame, even in your Lordships’ House and in the other place there have been unpaid interns—a fact that is to be deplored. Many fashion houses, art galleries, publishing houses and advertising agencies do the same. Why do they do it? Because they can. Young people clamour to work in sexy, exciting companies. Even those that, if not exactly sexy, have great prestige, such as your Lordships’ House, are able to take advantage of that. Several years ago, at a glitzy dinner for the super-rich, an internship with a major fashion magazine was auctioned for tens of thousands of pounds. I know that to be true because I was there. I was horrified.

The reason why graduates are prepared to work for nothing is obvious: such are the demands for a well-crafted CV that anyone who can will work for nothing. For most normal families who have underwritten their children through university, it becomes an intolerable extra burden to pay even more to support their child through one or more internships. As has already been mentioned, if the job is away from home and in a big city, the costs can be enormous.

Unpaid internships are hugely divisive. It is simply not fair that the quality of a CV is so stacked against those whose parents cannot pick up the phone and get them an internship. It is equally unfair that underpaid internships are taken by those who are already privileged. If we as a nation are trying to encourage young people from less well-off backgrounds to compete with those who are more privileged, then ensuring that interns receive a living wage will go some way to redressing this divide.

I must caution the noble Lord, Lord Holmes, because I can anticipate what the Minister will say by way of reply. I make this prediction because several years ago, as has been mentioned, I raised this issue in your Lordships’ House and received an unsatisfactory reply. The Minister said that legislation was already on the statute book to ensure that interns who worked for more than four weeks would get paid at least the minimum wage, so no further legislative action was required. I urge the noble Lord not to accept this answer, because the facts on the ground do not substantiate this claim. According to the Social Mobility Commission, there are 70,000 interns in the UK, up to half of whom are working unpaid—35,000 unpaid interns. It is quite clear that current legislation has not prevented this unsavoury practice. Therefore, my question to the Minister is: how many examples have there been of an employer being successfully prosecuted for avoiding paying an intern? This Bill will not solve the problem, but it will go some way towards creating equal opportunity in the workplace and it deserves all our support.

Photo of Baroness Brady Baroness Brady Conservative 11:51 am, 27th October 2017

My Lords, it is a privilege to speak in this debate today, not least because it is on a subject about which I am hugely passionate. I fully support the aim of the Bill, which is to ensure that all work experience placements that go on longer than four weeks pay the national minimum wage. Others have spoken with great conviction, in particular the noble Lords, Lord Holmes and Lord Mitchell, on the issue of internships, all of which I fully support, but I shall focus my remarks on the importance of work experience and the role it can play in getting young people ready for the workplace.

Work experience is just that; it is a taste of the workplace, allowing some understanding of what it is like, in order to enable young people to make one of the hardest transitions we all ever have to make in our life: moving out of education and into work. It helps young people understand what careers might be right for them and what they can expect when they get into work, but it is very obviously not a job. They are not doing something an employer needs to have done for no cost. It should be for the employer to tailor a programme that gives participants as much exposure to the realities of the labour market as possible, as well some insights into that particular sector.

One of the biggest challenges employers face is that school leavers are simply not ready for work. They can lack even basic soft skills, such as confidence, engagement, conduct and punctuality. That is why I am very proud to be associated with what Barclays is doing with its LifeSkills programme—I declare an interest as an ambassador and as chair of the LifeSkills council. It offers young people the chance to build job-hunting toolkits, helps them with CVs, covering letters, LinkedIn profiles, and even the role of social media in improving an application or a CV in order to get a job. It offers interactive challenges to help young people identify the skills they may already have, to help sell those to an employer. Most vitally, it offers a portal to help young people access real work experience opportunities—but, crucially, work experience that is relevant to them, so they can see for themselves if the career they have thought about is what they expected. LifeSkills is completely free of charge and has helped 5 million young people gain valuable skills to be work-ready and organise work experience.

It has even had to offer virtual reality work experience to help bridge the gap. This is a video-based programme in which a young person can journey through a day of what it would be like if they were at work—meeting virtual colleagues and completing virtual tasks. That is because even though 66% of employers believe that work experience is valuable in recruiting young people, only 30% actually offer it. This means that it is for employers to do more in offering these placements to young people, and it is in their interest to do so. So I think we need a change of mindset from one in which employers think of work experience programmes as something they can exploit to get something done for nothing, to a community-based approach where a business asks: what can my business do to give a young person the support they need to make the transition to the workplace and get on the road to having a career? Instead of complaining about the skills pipeline, employers should step up and do something about it. They should ask what they can do to offer more quality workplace experiences and be ambitious and creative about how they do it.

This is no longer about free labour, as the Bill makes clear; it is about making a contribution to improving the life chances, skills and workplace readiness of a young person, as well as finding possible recruits for the future. Now, what business would not be interested in that?

Photo of Lord Flight Lord Flight Conservative 11:55 am, 27th October 2017

My Lords, I congratulate the noble Lord, Lord Holmes, on bringing this Bill forward and I very much hope that the Government will support it. Work experience internships are an extremely good idea in themselves, as the noble Baroness, Lady Brady, has just pointed out, helping people to go along the road towards employment; the problem is that, clearly, if they are not paid, only those who have parents who can afford it can take part. So it is socially divisive and unfair for internships not to be paid. Work experience lasting more than a four-week period obliges thereafter the payment of the minimum wage. I must say that I do not really agree with the four-week qualification period; that is still a problem. A lot of internships will be in London and the cost will in the order of £1,000 a month.

My experience, and I declare my interests as in the register, has been of providing internships at Metro Bank, where we pay the London rate from the first day people arrive and all the way through their internship. I am quite concerned that the four-week qualification period may get used to limit internships to a four-week period so as to avoid costs. Often, it is desirable for internships to be longer.

As noble Lords are aware, the legal background is that the National Minimum Wage Act 1998 did not specifically provide for work experience internships as they have developed substantially since then. Work experience does not usually meet the Act’s definition of work, where payment of the minimum wage is required. It is extremely constructive that this Bill provides a full definition of internship work experience as,

“observing, replicating, assisting with and carrying out any task with the aim of gaining experience of a particular workplace, organisation, industry or work-related activity”.

This is a far wider definition than one of just work, and it is necessary if the 1998 Act is to be effective in requiring payment for work experience.

Internship work experience has become a key part of young people getting a job, especially in the professions, quasi-professions and design territory; and as others have pointed out, there are some 70,000 work experience internships going on every year, around half of which are unpaid. Interestingly, around half the employers participating regard candidates without internship experience as having little or no chance or getting a job, so it has become a prerequisite for employment in many areas. Clearly, unpaid internships are socially divisive, as I have said, as the less well-off cannot afford them. Some 40% of those considering applying for an internship are put off by the costs, and 39% of those offered an internship turn it down because they cannot afford it.

The 1998 Act requires workers to be paid but, as I have just pointed out, an intern does not fit its definition of a worker. For an intern to count as a worker, the firm and the individual need obligations to each other. For example, if there is no obligation to turn up to work, you are not classified as a worker.

The Prime Minister, speaking recently at the launch of Good Work: The Taylor Review of Modern Working Practices, stated correctly that,

“employing unpaid interns as workers to avoid paying the National Minimum Wage is illegal”.

But I think that misses the whole point: the need is for interns to be paid, whether or not they do work or fit the definition of a worker.

It is time to treat internships and work experience as part of the formal labour market. Those doing them should be paid at least the minimum wage, preferably without a four-week qualification period. It is unlikely that this would reduce the number of internships. The YouGov poll pointed out that it would not affect the offering from about 72% of employers, or that they might even add to it. I trust that the Government will listen to my noble friend Lord Holmes and to this debate, and address an issue which is otherwise unwisely socially divisive.

Photo of Lord Winston Lord Winston Labour 12:01 pm, 27th October 2017

My Lords, I congratulate the noble Lord, Lord Holmes, on his altruism, the way that he has produced this Bill and the sentiments behind it. I will yet again violently disagree with my noble friend Lord Mitchell—I am always having arguments with him, as I will on this occasion as well. I am surprised to congratulate the noble Baroness, Lady Brady, on getting to the kernel of this matter. I completely agree with her. The Bill is of course extremely well-meaning but it has deep flaws and, as it stands, would prevent the very things which the noble Lord, Lord Holmes, would like to promote. The real issue is that it would discriminate against the people he wants to promote.

My father died when I was nine and my mother was left destitute. I realised only recently, reading some of the things she wrote when I was a teenager, just how poor she was and how she managed. I went to do my first work experience—unpaid, of course— when I was just of school leaving age. As it turned out, I worked as an assistant caretaker in a girls’ school, clearing the gym. It was a very exciting experience for me and it might well have shaped my subsequent career—I am not certain. Thereafter, I spent a couple of months in a radio factory playing around with electronics. Those two jobs focused two aspects of my career. They made me understand, for example, what it was to be in a work environment, and talking to the man lagging the pipes in the basement of that school made me understand the issues associated with industrial diseases, which turned out to be quite important during my medical career.

To be serious for a moment, there are many types of employment in this country for which work experience is extremely difficult to get. For example, the National Health Service is a disgrace in this aspect. It is very difficult for young people to do any kind of useful work experience in the health service but unless they do, they cannot then apply for a course—whether that be in nursing, medicine or any of the other caring professions—at university. In fact, I had a letter this week from a 19-year-old who wants me to help her with her work experience but as I am not now employed by the health service, I know it is appallingly difficult for me to help her get any kind of experience in a hospital. It is important for the noble Lord, Lord Holmes, to understand that if we pass the Bill, working for a month as a hospital porter or any kind of really trivial job in the health service will probably be insufficient for most people. That really needs to be looked at in this circumstance.

I want to mention my middle son, Joel. When he was just at school leaving age, my lab was having great difficulty with a piece of analysing equipment the purpose of which was to understand various proteins and sugars. None of us scientists in the lab could get the damn thing to work, even though we had spent some hundreds of thousands of pounds on it, and because it was out of warranty we just left it on the shelf. Joel came in, looked at the machine and, having worked with the scientists for about a month, suddenly found himself quite useful. He took it apart, fiddled with it and, using his electronics expertise, after about six weeks he got the thing working so well that he ended up being named on the paper when the work was published. It would never have been published otherwise and it was his first scientific publication. I do not doubt that that achievement helped at his interview when he went to Cambridge, as he was obviously able to talk about how he could work in a laboratory profitably.

One very common problem in science is that people who come into a laboratory for just four weeks are not only useless but dangerous. They can make your work more difficult and destroy things. It takes a lot of experience. At the moment, I have a place for somebody who I would love to see as a research assistant but I know that for the project I am involved with, it would take a minimum of two months’ intensive training before we could find somebody suitable. That will of course cost us quite a lot of money and time. Thereafter, one might well be able to pay such a person, but that is important.

Finally, I will mention one thing which is close to my heart at the moment. Just this week, I am applying for some intellectual property which we think we will exploit. With some luck, I believe we may revolutionise one aspect of reproductive medicine. One of my junior colleagues who works with me at the Genesis Research Trust at Hammersmith Hospital is largely involved with this work. She came to me as an undergraduate student, while doing a scientific degree in another university, and said, “I think I’ve made a mistake. I really would like to work in a research laboratory. Could you accommodate me during my holiday?”. She worked throughout her entire holiday, for two months in the summer and again over Christmas. She was of course unpaid but she became extraordinarily good at that work. At the end of her time, she said, “I’ve been looking at what you do and I want to apply for medicine”. She did not come from a privileged background; it took a long time for her to get into medical school. Eventually, having qualified in medicine, she got a particularly good degree and in the same year, remarkably, having got that she applied for membership of the Royal College of Obstetricians and Gynaecologists, and of the Royal College of Physicians. She got both those extremely difficult exams in the same year and has now completed her PhD doctorate.

This young scientist now has the most promising career ahead of her, which would not have been possible had she not had that long-term contact in the lab. Eventually, of course, we found work for her and she was paid, but there was no possibility at all that she would have been taken on under the rules of the Bill. The noble Lord, Lord Holmes, must understand that if we put the Bill in place as it stands, it will be more difficult for people to come into the health service or into highly technical jobs to get the kind of training and experience which is necessary to progress their career. That is a very damaging aspect of the Bill, and I wait to see how we can amend it as it goes through the House.

Photo of Baroness Jenkin of Kennington Baroness Jenkin of Kennington Conservative 12:08 pm, 27th October 2017

My Lords, what an incredible privilege it is to speak in another amazing debate in this House, made all the more powerful by the individual stories that we are hearing. I pay tribute to my noble friend Lord Holmes, not just for his powerful arguments today but for his inspirational work, not only on the Bill but on social mobility and related matters. He is a fantastic role model and this Chamber is lucky to have someone of his experience leading on the Bill. As a result of his media performances over the past week or so, many more people are now aware of the issues. The Bill has much support from many organisations and, certainly, from many individuals who feel that they are missing out under the current rules.

I understand that the Government feel that the Bill is unnecessary because interns are already eligible for the national minimum wage, if they meet the definition of “worker”. But there are loopholes and a lack of clarity, as the noble Lord has pointed out. I urge the Government to think carefully about the questions raised in the Chamber today.

Katherine was an unpaid intern at a charity working on anti-slavery and poverty projects. She lived in Essex but the charity would pay London travel expenses only, that is a London travel card each day. At the end of the month, Katherine was hundreds of pounds out of pocket. She said: “When I look back on it, it was a huge expense for me at the time. Internships are only for privileged people living in the capital. I don't come from a well-off family; my dad is a labourer and my mum works in a call centre. The internship definitely opened doors for me; it was all I talked about in my interview for my current job, but the irony of working for free while working on anti-slavery and poverty reduction projects was not lost on me”.

I have a girl helping me at the moment—paid by me—who is currently working as a paralegal in a paid internship. She has done two completely unpaid internships and one internship with expenses only. She had no idea that there was even the opportunity for her to be paid under the current legislation.

The number of internships has risen dramatically, and 31% of university graduates working as interns are doing so for no pay. As we know from the briefing we have all had, the Sutton Trust estimates that there are at least 21,000 unpaid interns working in the UK at any one time. Dr Angus Holford, of the Institute for Social and Economic Research at the University of Essex, used the destination of leavers from higher education to study what happened to students who were on unpaid internships six months after graduating from their first degree. The study confirmed that graduates from better-off backgrounds were more likely to be accepted for good internships that promise a relatively high labour market return.

There are increasing examples of best practice too. Imperial College Healthcare NHS Trust has recently changed its work experience programme. Medical work experience on your UCAS form is critical to gaining an offer from a medical school. Imperial now liaises directly with a wide range of schools and gives work experience to those students the schools recommend rather than dealing with hundreds of parents. I believe other organisations should follow that example. On average, people complete seven placements before getting a job, which illustrates how important they have become in securing full-time employment and the potentially far-reaching consequences for those unable to land them.

Before I sit down I would like to raise the related issue of youth full-time social action and make the point in the strongest possible terms that this is completely separate from unpaid work experience or internships. Charities utilising full-time volunteers are exempted from minimum wage legislation under Section 44 of the 1998 Act which covers the definition of voluntary workers. The main issue the Bill raises for organisations such as City Year UK, which I have a relationship with, and other charities that deploy full-time volunteers is that it once again underlines the need for a distinguishable legal status for those participating in youth full-time social action in order to clarify how it is different from unpaid work experience and internships and better to support and recognise full-time volunteers. Youth full-time social action can change lives, and full-time volunteers deserve so much more than to be categorised as NEETs. I urge the Government to look at this issue.

Modern day slavery is thriving and is part funded by the rise in unpaid internships. My noble friend Lord Holmes has made a powerful argument and I hope the Government will look very carefully at the issue.

Photo of Lord Thurlow Lord Thurlow Crossbench 12:13 pm, 27th October 2017

My Lords, I welcome the Bill. I thank the noble Lord, Lord Holmes, for introducing it and for his powerful speech. I do not think any of us can doubt that the core principles—preventing exploitation and abuse by employers and proper pay for a job—must be good.

The point on which I shall focus is slightly different from those made so far. I embrace work placement, work experience, internships and possibly other descriptions of a similar kind. I want to draw attention to those with special needs, particularly intellectual disabilities. I am referring to those who have jobs and who are possibly slow and inefficient in the workplace by reason of their disability. They have special needs, and I am concerned because, if unamended, the Bill could or would mean that their work opportunities substantially reduce.

Early in my career I was asked if I would give work experience to the son of a friend. I was a junior person in my firm, and I did not know how to set about it. I wanted to help, but I had no idea who to speak to and I wimpishly simply said that I did not think I could do it. I was unsure how to respond. To my shame, that was the result. Some years later, I become responsible for an office. I had been living with the guilt of my earlier shame and I dedicated a desk in the office to be used exclusively for work experience. Anybody in the office who had approaches that they felt they would like to support could make the desk available for a week or a fortnight to people wanting to develop that experience. Whether that came from privilege or access did not really matter. It was not an opportunity to learn about work; it was an opportunity to learn about the dynamics of an office environment, how people interact with each other and cope in the workplace when there is a bit of a crisis or when it is just calm. That was a great success and many dozens of people went through that desk. I still live with the shame of my early decision but I was pleased to be able to try to do something about it.

However, I shall not refer just to my experience or examples. Those with disabilities working for low money rely on employers generous of spirit. Those employers recognise the special needs and the special case and try to help. These are likely to be long-term arrangements. They may be referred to as internships, but they are really employment, and they will certainly be more than four weeks. They may perhaps be semi full time. Many of these people cannot work full time and have to do shorter hours. These internships—if I can use that word—are specially designed to help the individuals not the businesses. Indeed, they may contribute to a very limited amount of the business thrust. However, the key point is that these people get up in the morning and go to work like other people. These people get up and have a job like other people. At the end of the month these people get paid like other people. The wage does not have to be the same as for others. The national minimum wage may be too much for the compassionate employer who sees the other priorities. Indeed, these interns may not be responsible with money. They may be looked after by their families or other care providers. These internships work wonders for the interns. Their self-esteem soars, and their pride in doing a job blossoms. They enjoy the dignity that that brings, as others do. It is not about the money.

I appreciate that there are great drafting difficulties involved in what I am referring to, but we take pride in the calibre of our Bill drafting teams. The objective I seek should be unambiguous. We all have a common interest in getting it right. It is an opportunity for those in need. I support the Bill and I do so enthusiastically. I applaud the noble Lord, Lord Holmes, for introducing it. Addressing this abuse by bad employers is long overdue, but I request additional drafting to exempt those with special needs from the national minimum wage. They are a special case, and they need special provision for lower wages. If the choice is that or no job, surely fulfilment and self-worth override. I therefore request that we look at adding suitable amendments at later stages of the Bill.

Photo of The Earl of Dundee The Earl of Dundee Conservative 12:19 pm, 27th October 2017

My Lords, I support the Second Reading of this Bill. It is a necessary and timely measure; and I join with others in thanking my noble friend Lord Holmes of Richmond for introducing it.

I would like very briefly to connect together three aspects: first, the beneficial effects and merits of the Bill; secondly, however, certain risks associated with it; and thirdly, the wider context of work apprenticeships in the UK.

The main provision of the Bill strikes a good balance. Flexibility remains for unpaid work experience up to four weeks, yet beyond that period, employers would be obliged to pay the national minimum wage to those undertaking work experience. In recognising what is unfair within the present system, several recent commissions and reports have already argued for change. In the first place, the Low Pay Commission observes the thin dividing line between what is deemed to be work—already subject to the minimum wage—and work experience, which is not. The Social Mobility Commission notices the detrimental impact of unpaid internships on social mobility, in particular in London, for those young people who are unsupported financially by their parents. And in view of the temptation to exploit work experience as unpaid labour—although a majority of employers behave decently and honourably—the Taylor review investigates the proportion and cases of those that do not, to which my noble friend Lady Stowell of Beeston, the noble Lord, Lord Mitchell, and other noble Lords referred.

Nevertheless, there is always a risk that once employers have to pay after four weeks, they would cut down on numbers previously taken on, thus disadvantaging those benefiting from current opportunities. However, recent assessments suggest otherwise. Not least do we learn from one carried out by YouGov for Intern Aware—that employers are unlikely to be too much put off by the Bill, with 62% saying that they would keep up their present levels of interns, while 10% have even alleged that they would hire more. Only 10% claim that they would hire fewer. Feedback also shows that 65% of employers would support a four-week limit, with only 12% against it.

However, if this Bill may not threaten existing numbers, clearly of prime importance is that its changes should also help consolidate and inspire improved quality and standards, as the qualifications of the noble Lord, Lord Winston, implied, and not least through a community-based approach, as my noble friend Lady Brady suggested.

In one sense, its introduction of the minimum wage moves internships closer to apprenticeships, for what is new is that participants in each of the two different schemes will now be paid. This and other elements of convergence might possibly assist better organisation, direction and efficiency.

That apart, I know that when he comes to reply, my noble friend the Minister will agree about the constant need to raise the performance of both apprenticeships and internships so that jointly they can properly serve to provide an effective transition from school to work. What plans do he and the Government now, therefore, have to enhance the quality of both internship and apprentice programmes and to reduce their current drop-out rates, making them more relevant and valuable to youth while more attractive to employers?

Meanwhile we can take heart from the Bill: its redress of unfairness and anomaly; its approval by employers and participants alike; and along with apprenticeships its scope for improving opportunities for young people as they seek work and skills.

My Lords, I add my congratulations to the noble Lord, Lord Holmes of Richmond, on the Bill, on his brilliant speech and on the tenacity and passion he has shown in driving this campaign. This is only my second time speaking in this Chamber, and it is truly inspiring to have the chance to speak up on an issue that has long been close to my heart. I declare my interests as set out in the register. I am a council member of the Institute of Directors but I am expressing a purely personal view in this debate.

In my maiden speech, I spoke briefly about my background growing up in Newcastle upon Tyne and then coming to London almost 20 years ago to start my first job. I remember all too well the mix of fear and excitement. I had gone to Cambridge University from a comprehensive school in Newcastle and had a fantastic time at university, so much so that it was not until I started to think about what I might do next that I realised there was a whole other world out there—the world of contacts. My family did not have a black book of contacts, or at least none who worked in business, media, politics, publishing or the arts, and I did not know a soul in London, and that is where you were inevitably directed by careers advisers, as if there was no other city in the UK.

When we all left Cambridge, genuinely kind and well-meaning friends told me to lodge with a family friend and get work experience through a contact. By this point, I was completely baffled, so I applied for a range of bottom-rung administrative jobs and was fortunate that I landed myself a temporary role in the City on what was fair but low pay. This was before the minimum wage, but it was a fair wage and would have served me well if, indeed, I had had a friend’s sofa to sleep on. As it was, after I had paid my rent, bills and transport, I was overdrawn again, month after month, by the second day of each month.

I am standing here today, so clearly life has not treated me too badly. I have been very fortunate and have gone on to have a series of very fair and inspiring employers. But I have never forgotten the anxiety and, at times, the despair of my early 20s as a single woman in London, wanting to stand on my own two feet and make my family proud. Many times I felt that I would simply have to give up and go home. That would not have been the end of the world, as I had a loving and supportive family, but it was not the independent life I had been brought up to believe could be mine.

Mine is not a story of injustice—I have been privileged—but it is intended to illustrate how hard it is to go just from a standing start. That is why it horrifies me to see that nearly 20 years later, many young people do not even get a fair start. What message are we sending out about the sort of society we want to be? I was talking to a woman in her 20s recently, and what really depressed me about the conversation was just the sense of resignation. She told me, “While we were doing our degrees we were encouraged to get work experience or internships when we finished. These were almost always unpaid, and there are countless stories of organisations that have people coming through in rolling three-month slots for no pay”. She said, “To be honest, people are so desperate to get names for their CVs that often they don’t push for pay, because they know there is someone else more privileged who will be able to do it for free.” One of my closest friends is a teacher at a comprehensive in north Manchester, and when I talk to her, she says that many of her very bright year 12s just could not even begin to contemplate the idea for working for free in the future on the vague promise of something better, so they are effectively locked out of many of the sectors that would benefit so much from their talent.

I applaud the naming and shaming that organisations such as Intern Aware have done, and indeed those individuals who blew the whistle on these practices, but as other noble Lords have said, it is hard to call out any bad behaviour at the very start of your career, when all your energy goes into impressing people. Some say that the law is clear enough on this issue, and it is of course the case that many businesses and organisations do the right thing, but unpaid internships are still an open secret. A fair day’s work must equal a fair day’s pay. I know the Government have looked at this issue before, and having worked in business for much of my career I fully understand the importance of ensuring we keep as flexible an environment as possible. For me, this Bill strikes the right balance: it is proportionate and will still allow for ad-hoc work experience for a limited period.

We cannot just pay lip service to the need to bring people from all backgrounds into the professions that are still too much the preserve of the already privileged and/or London-based. I talked about coming to London as if it were the only route to a career, and at the time, that was the only narrative I had heard. All of us who feel passionately about this need to help think of more creative ways to open up every sector to talented individuals from disadvantaged backgrounds from an early age, wherever they live.

One thing that struck me recently was the Social Mobility Foundation’s one-for-one campaign, which says to employers in different sectors that if they are planning to offer a short stint of work experience to a school-age contact, they should match it with a placement to someone from a disadvantaged background. We could all think about different ways that this could be done in organisations we are associated with. These kids do not usually have day-to-day exposure to professionals, and this inevitably has a knock-on effect on their confidence. We want them to be hammering on the door, ready to start their careers in fairly paid jobs when they finish their education, whenever and wherever that is. It would be a strange organisation that did not want access to the best talent, so if employers do not find ways to open the door to people from every socioeconomic background, from every city, every town and every village in the UK, everybody loses.

Over the years, when I have talked about these sorts of issues, I have been told in private conversations by people of every political persuasion and of none that I do not want to risk appearing “chippy”. This is not a matter of class envy, though; all the young people I meet, regardless of their backgrounds, want to stand on their own two feet, earn their own living and feel that they earned their role because of their talent, not because of who their parents are. For their sake, and for the future prosperity of the UK, we owe them the chance to do so. It is on that basis that I am pleased to support the Bill.

Photo of Lord Haskel Lord Haskel Deputy Chairman of Committees, Deputy Speaker (Lords) 12:30 pm, 27th October 2017

My Lords, last week Mr Chris Willard from the Financial Conduct Authority came to your Lordships’ House and briefed us on its recent survey, Understanding the Financial Lives of UK Adults, a paper that tries to understand consumers as people and observe their financial behaviour and experience in the context of their everyday lives. It does so by dividing the population into six age groups. Of UK adults aged 18 to 24 it says that,

“satisfaction with overall financial circumstances is amongst the lowest of any age group”.

If any confirmation is needed of intergenerational unfairness as far as money is concerned, that report provides it. As this debate illustrates, part of that unfairness is the way in which some young people are exploited through unpaid work experience. No speaker in this debate is content with such exploitation and unfairness, and I too welcome the Bill as a step in the right direction to correct it. This is an opportunity to show commitment not only to young people but to their parents, which is important.

Of course proper internship has genuine value, as the noble Baroness, Lady Brady, told us. It helps firms to make a better judgment about potential employees and helps young people to decide whether they want to do a particular line of work. Both sides gain experience and benefit from it. Yes, it requires supervision and flexibility, as my noble friend Lord Winston explained, but organisations such as the Prince’s Trust and the National Careers Service try to arrange this kind of thing in such a way that both parties feel valued and vested.

The noble Lord, Lord Holmes, told us that for years some less scrupulous businesses and organisations, large and small, have exploited and misled young people by presenting work as an internship, especially in those sectors and areas where few jobs are available. As others have said, the Low Pay Commission, the Social Mobility Commission and Matthew Taylor’s recent report have all criticised that practice. The social mobility survey showed overwhelming support for the points made by the noble Lord, and indeed he and my noble friend Lady Morgan gave us the numbers. The provisions in the Bill do something about this situation by identifying the same 18-to-26 age group as in the FCA report, and saying that for this group work experience cannot extend beyond four weeks. As the noble Lord, Lord Holmes, explained, it also attempts to clarify the terminology. That is very important because it puts everything into the scope of work, however it might be described.

Here in Parliament our major concern is Brexit, but out there a major debate is going on about the effect that decisions made by algorithms and artificial intelligence are having on our daily lives, and how they are being used to eliminate people as a cost. Surely part of our response in Parliament must be that we have to be much more socially and emotionally aware of this. The Bill before us is an opportunity to show awareness towards 18-to-24 year-olds, the age group that will be most affected by these new technologies. This is another reason to support the Bill.

I too have spoken to some young people about the Bill. Many told me they felt that interns were given rather menial tasks. They felt that paying interns would encourage employers to give them more skilled work, from which both employer and intern would benefit. Students already face a lot of debt when they come out of university, averaging more than £50,000 with interest, which equates to them potentially taking jobs below their skill level rather than opting for an internship that could benefit them in the longer run because they need the money. Paid internships would consequently enable students to have more choice over what they wanted to do after leaving university.

This is not the first time that Parliament has tried to deal with this issue; the excellent Library brief lists the debates and Bills. I put it to the Minister that this long list emphasises the need for the Bill. Like the noble Lord, Lord Mitchell, I hope the Minister will not say that although the Government have “every sympathy” with the purpose of the Bill, it is unnecessary because the law already prohibits this kind of exploitation. That may well be true, but in practice—in real life—the law is not working, a point made by the noble Baroness, Lady Stowell.

We all know that, from time to time, the law does not deliver what it says, and this is one such case. If the Government are sympathetic to the plight of these young people and the law is not working, why not accept this Private Member’s Bill, which makes it easier for the Government to achieve their purpose?

There is an obvious need for the Bill, as all noble Lords have said. The Prime Minister herself referred to this when welcoming Matthew Taylor’s review. I congratulate the noble Lord, Lord Holmes, on introducing this simple Bill, and I hope that the Government will welcome the opportunity to support it.

Photo of Baroness Stedman-Scott Baroness Stedman-Scott Deputy Chairman of Committees, Baroness in Waiting (HM Household) (Whip) 12:37 pm, 27th October 2017

My Lords, earlier today somebody said to me that they did not much like the idea of being here on a Friday. I am very pleased to be here on a Friday discussing this important issue, and it is really good to be in a Chamber full of people whose hearts are beating in concert on such an important matter. I declare my interests, as can be read in the register. I am genuinely pleased to be able to speak in this debate to confirm my support for the Bill and congratulate my noble friend Lord Holmes on bringing it to this House. His call to action could not be clearer or more transparent.

There are two clauses in the Bill. Clause 1 prohibits unpaid work experience lasting longer than four weeks by making it compulsory for employers to pay the national minimum wage to individuals undertaking such work experience. I am also pleased to read that a YouGov poll found that that limit is supported by two-thirds of businesses, with only one in eight opposing it. They will soon cotton on—we should not worry too much about that—but it would be helpful to know the reason for their opposition. I cannot find one myself, other than cost. My experience of business in this field is that it is open and committed to giving young people the chance to make the most effective transition from school to work.

The matter of unpaid internships was included in Matthew Taylor’s review of employment practices. The report states:

“it is clear to us that unpaid internships are an abuse of power by employers and extremely damaging to social mobility”.

Alan Milburn, who chairs the Social Mobility Commission, said:

“Unpaid internships are a modern scandal which must end. Internships are the new rung on the career ladder. They have become a route to a good professional job. But access to them tends to depend on who, not what you know and young people from low-income backgrounds are excluded because they are unpaid. They miss out on a great career opportunity and employers miss out from a wider pool of talent. Unpaid internships are damaging for social mobility. It is time to consign them to history”.

I hope that that is what we will be able to do.

I know from my experience of young people who struggle to get a job because they lack experience, but they cannot get the experience because they cannot get a job—or, in the words of my noble friend Lord Holmes, they are unable to get experience because they cannot afford to work for it. The value of work experience is critical for young people. I have seen first-hand the difference that it can make and, as I see it, there are two parts to it. First, as the noble Baroness, Lady Morgan, mentioned, there is experiencing the world of work; then, there is work experience. These are two parts of the journey for a young person. Ideally, experiencing the world of work should start as early as possible. I cannot remember the detail, and I do not want to quote something that is inaccurate, but the more times that a young person, early in primary school, has contact with and access to business, the more likely that their networks and understanding of the workplace will be relevant to them. Employers should visit schools, and schools should visit employers.

I remember taking some young people to an employer’s premises, and he really put a show on for them. It was beautiful. He was asking them questions, and they asked him how much he earned, and he managed not to tell them that but to give them a good answer. He asked them what they might do, and a little boy said, “I want to be a boss like you”. “Why do you want to be a boss like me?”. “Well, you get a nice car, you can tell everybody what to do, you can go home when you want and you can have lovely holidays”. I saw this man’s face change, and he said, “Just let me tell you what I have to do as a boss. I have to sell a certain number of products every week so that I can pay all my staff’s salaries. Then I have to sell some more products so that I can pay the bank back”. Suddenly, the penny was dropping, even in that young mind.

I can also tell you about a young lad whose mum had a new man in her life. Well, good for her, but they had both decided that there was now no room in their relationship for him. One of my colleagues at Tomorrow’s People found him via some good community people, who said that he was living in a tent in the woods—I mean, it was terrible. So off my colleague went, found him, took him back to the office and we paid for him to stay in a bed and breakfast for a week so at least he had a decent roof over his head and something to eat. We spoke to him for ages about what he would like to do. He said, “I’ve got no idea”. We asked him what sort of business he would like to work in and he said, “I’ve no idea”. “You’re going to help us out here,” we said. “Do you want to work in an office?”. “Oh no”, he said, “I want to work outside”. So we found a landscape gardener who said that he would take him. Right from the word go, there was a financial transaction—I do not know the detail, but there was one—and he was able to really add value to that place of work. He was then taught to drive, and the boss paid for it. So those were all great things. He was experiencing work, but he was also experiencing respect and decency, which so many people have spoken about today. When I introduced the boss and the young lad to the Chancellor, George Osborne, he was asked whether he liked working where he did and he said, “Yes, Mr Osborne—every time I take that van out, you get £60 in VAT”. He understood; the boss valued him and he valued the boss.

The other point that I would like to raise is about not only the value but the accessibility of such an experience. I am right behind this Bill—please be under no illusions—but I am not sure that it is going to stop the practice, which has happened to me, whereby someone will ask, “Debbie, can you please take my son for a couple of weeks, keep him out of trouble, keep him occupied and give him a bit of experience?”. That is what happens. We need to have access to really good, well-managed experiences, but the black book will prevail. I cannot think that there is anybody in this Chamber who has not been called. People will ring and say, “Do you know Baroness Brady? Can you ask if she can do this?”. It happens all the time, and I do not think that the Bill goes far enough to try to do something to make sure that everybody gets the opportunity where we can.

I had a rummage in my brain—it did not take too long, as noble Lords can imagine—and I wondered whether there was something that we could do to put internships into the apprenticeship system, so that they are on a register and lots of people can refer people to them. Can we not start putting internships into these new opportunity areas so that business has a register of them and everybody gets access to them? I, for one, would be more than happy to sit down with the noble Lord, Lord Holmes, because he is a good chap, and any others in the Chamber, to find out how, without having to put legislation into place—but if that is what it takes, it takes—we can make sure that we have a system whereby people have the opportunity, whoever they are, wherever they have come from, however much their mum and dad love them, to go for one of these internships. As the noble Baroness, Lady Stowell, so eloquently put it, we live in a world where not everybody gets an equal chance. Our young people today, I believe, think that maybe everybody wants the equal chance to be unequal, and I hope that this Bill knocks that on the head.

Photo of Lord Mendelsohn Lord Mendelsohn Shadow Spokesperson (Business, Energy and Industrial Strategy), Shadow Spokesperson (International Trade) 12:46 pm, 27th October 2017

My Lords, I thank the noble Lord, Lord Holmes of Richmond, for introducing this Bill and for the opportunity to discuss this important issue today. He has been a committed champion of ending unpaid internships and has set out extremely well in his outstanding speech the unfairness of the status quo, the broad base of support for action and the weakness of the arguments against change. I also paid tribute to the noble Lord, Lord Mitchell, for what he has done to advance this issue and for the strength of his words. I thank, too, the campaigners and others who have done so much to bring this issue to the top of the agenda. I congratulate Intern Aware, the Social Mobility Commission, the Sutton Trust and many more on their hard work. I hope that it will pay off and that the Minister will be able to give us some welcome news at the end of this debate.

As far as these Benches are concerned, there is really no good excuse to brush this issue under the carpet once again. The great contributions from all sides of the House today demonstrate that the time for action has arrived; it is far overdue—and we on these Benches lend our support to the Bill. In saying that, let me be absolutely clear about what this is not about and what it does not cover, and to address many people’s concerns that there may well be unintended consequences. This is about internships, not work experience or about trying to impair work experience or limit or reduce volunteering, which has a tremendous place. Indeed, volunteering is crucial for many organisations and provides a great supplement to many institutions. As the co-president of a charity that supports people with learning disabilities, I know that we have many people who volunteer, not just in running some of our shops to help to raise money but in supporting some of the facilities and enhancing the care and support available. They are not in replacement of full-time staff who have departed. The role of volunteering is particularly clear. In this regard, the noble Lord, Lord Thurlow, raised an important point about businesses also being able to provide work opportunities for those in similar conditions. I do not believe that there is a case not to pay them or not to pay them properly. The definitions of how they work can be as part-time or under other sorts of arrangements, but I do not necessarily agree that just giving someone such an opportunity should allow someone to believe that there is a no moral responsibility to pay them. I am not sure that we are entirely comfortable with that.

People have, however, made a very good point about the importance of work experience—this is absolutely essential and very important. It is important also to draw the distinction. Many people have made the case for work experience, which we support. It was raised by the noble Baroness, Lady Brady, and the noble Baroness, Lady Wyld, made an important point about one school saying that not just do you ensure that those people who are likely to wish to get that sort of thing are able to, but you reach out to find those who do not. That is absolutely crucial. We face the problem with work experience that we are not providing the right sort of opportunities or access to people. Those groups of people who are the “hard-to-reachers”, the ones who have for quite some time not been used to the world of work, are the ones who we should try actively to give some form of work experience. I would like the Government to use their convening power to find better ways to look at how we can expand access to and opportunities for work experience. This is an important aspect.

I disagree with my noble friend Lord Winston about the extent of work experience. He made an important point about people’s opportunities and chances but I do not believe that, if you have to train someone for two months to do a task, it can in any way be described as work experience; it is a short-term job. We have had some unfortunate circumstances in the health sector regarding how we can extend work experience or the requirements for it. The noble Baroness, Lady Nicholson, raised an important point about what is happening at Imperial College and the extension of opportunities there to address that. We should not create a system that creates mistakes in and of itself.

The Labour Benches have been calling for action to deal with this issue for a number of years. In 2015, we pledged to introduce this very policy of a four-week limit for unpaid work experience and, in our most recent manifesto, we again pledged to ban unpaid internships because, as we said then,

“it’s not fair for some to get a leg up when others can’t afford to”.

Eliminating unpaid work experience lasting over four weeks will not solve every issue of social mobility and inequality, but it would have a good impact for such a simple measure. The four-week limit, as proposed by the Social Mobility Commission and expressed in this Bill by the noble Lord, Lord Holmes, strikes the right balance between ensuring that we do not inhibit genuine work experience or volunteering, while introducing vital legal clarity for businesses and workers and, most importantly, making a huge dent in a significant root cause of inequality.

The noble Lord, Lord Flight, made the point—for which I applaud him—that he is uncomfortable about even a four-week limit and that it should be from day 1. I think that the use of four weeks is important for creating legal clarity to define that there are not unintended consequences, but I applaud the noble Lord and Metro Bank for paying from day 1. Even though we support a four-week limit to help to clarify the law, I think that it is a disgrace that any company can take someone on an internship and not pay them from day 1. We should establish a cultural sense that they should be paid from day 1, not from the end of week 4—that is a cultural component that we have to introduce and then champion. Establishing the law, it has been said, does not change the heart; it restrains the heartless. The point of this is to restrain the heartless. We all have to encourage this way and make sure that people are properly recompensed for their labour.

One thing I want to be absolutely clear about is that part of this is that we are witnessing quite a large explosion in low-paid, insecure and unpaid roles and exploitative and bad practices. The noble Baroness, Lady Stowell, made an important point about young people feeling lied to. The noble Lord, Lord Haskel, made an extremely good point about making sure that we are socially and emotionally aware of the needs of those aged 18 to 25 as they face this new world of technology. Because practices are changing and the world is different, we have to address those needs in different ways.

There is an importance to the CV now that was not around even when I was younger. When I was 18, I went off to do some work experience, largely just to get a bit of money. I was a dustman and road sweeper for the London Borough of Barnet. Needless to say, I have never written a CV since, and it probably would not impress anyone if I did, but they were not as important then. Things change. It is important to recognise that this measure recognises that change and has the support of business. The measure is not anti-business, as some tend to argue. A survey by YouGov and Intern Aware showed that a clear majority of employers—two-thirds—would support a four-week limit and the clarity it would bring, and that only one in 10 would oppose it. Moreover, banning unpaid internships would likely boost economic growth by opening up opportunities and unleashing the creativity of a far wider pool of talent. Those who can be supported by their parents or have savings are not necessarily the most talented or the hardest-working. Public support is similarly emphatic, with the Social Mobility Commission finding that nearly three-quarters of the public support the four-week limit. This is not just about strivers; we have to ensure that this measure addresses those who are not.

I stress that internships are not a part of labour market flexibility. It is completely wrong and incorrect to suggest that they play any part in that flexibility. There is no economic case whatever for claiming that they are part of labour market flexibility and no economic risk whatever in adopting this measure. It is also important to say that small business does not require some special measure. If businesses cannot afford to pay people, their business models are wrong. We cannot give these things a free pass. It is absolutely wrong that the sectors which for years have been the bastions of a lack of social mobility and of middle-class advantage should ever be given a free pass on this. It is totally unacceptable that the practices adopted for years by companies in areas including the law, broadcasting, the media, production companies, the fashion industry and journalism can continue to be given a free pass. We have to put a stop to that.

To put it bluntly, I do not think people appreciate that the world is changing. I saw an information memorandum for a company that was going to be sold which revealed that a third of its workforce were interns. This device was used to reduce its employment costs as it operated on the basis of employing those interns. This is totally unacceptable. If we continue to allow these practices, people will evolve and adopt measures to enhance them. This is happening across the piece. I do not want to sidetrack this debate but we should not allow zero-hours contracts to have a couple of hours added, thereby changing the nature of the contract so it is no longer termed a zero-hours contract. We should not give people free passes to turn income into capital and private equity. If we allow accountancy firms to tell companies they can retain good workers by creating two companies, thereby ensuring that they reduce their pension commitments, we are giving them free passes when we should not do so. The evidence is there. We have to act, and responsible businesses want this measure. The Government should not stand in the way.

We have heard from the Government and others that new legislation is unnecessary because interns are already eligible for the national minimum wage if they meet the definition of worker. We need to move beyond this unhelpful impasse. It is true that if every unpaid intern took their employer to court, the likely result is that they would be found to be workers who were due the minimum wage. The few cases that have been brought by interns have been successful. However, given that the point of internships is the possibility of a full-time job in the end, does it make sense to place the onus on interns to take legal action, even if they are aware of that possibility, as some are not? The fact that legal action can be taken only once the internship has commenced further undermines the argument that enforcement of current legislation can alone solve this problem.

I think that the noble Lord, Lord Flight, is absolutely correct and the Taylor review is absolutely wrong about the legal position. It is absurd to say that HMRC can enforce this issue given its role and responsibility, the limitations on its budget and the job cuts it has suffered. Interns can meet the requirements of the national minimum wage if they meet the definition of “worker”. This depends on contracts, arrangements and a whole series of things which are so easy to get over, eliminate and not to have to deal with. It is a ridiculous test. It is, frankly, disappointing that while the Taylor review on modern employment practices accepted that internships are an abuse of power by employers, extremely damaging to social mobility and should be stamped out, it did nothing to follow through to its logical conclusion and propose sufficient action to do so. This was, incidentally, an unfortunate characteristic of the entire report, which made some astute observations but ultimately failed to recognise the inherent unfairness in new iterations of what are, in fact, very old exploitative business practices. I am not sure when the Government are planning to respond to the report but I caution against hastily accepting too many of the recommendations that fell far short of the actions required.

This Bill draws a clear line in the sand. It allows for legitimate work experience and volunteering, which is vital, but provides greatly needed clarity for businesses and other organisations on when work experience needs to be paid—after four weeks. This is clarity that they are actively calling out for. As my noble friend Lord Haskel said, the law is not working and needs to change. The noble Baroness, Lady Stowell, went even further, saying that the law and regulations are not working. There is no practical, meaningful or serious evidential case to do this and there is no moral case to do this. We need not wait any longer. We on these Benches are very grateful to the noble Lord, Lord Holmes, for bringing this Bill to the House. I urge the Government to look beyond the failed approach of recent years and lend their support to this Bill. It truly deserves the cross-party support that it has been shown today.

Photo of Viscount Younger of Leckie Viscount Younger of Leckie Lord in Waiting (HM Household) (Whip) 1:00 pm, 27th October 2017

My Lords, I congratulate my noble friend Lord Holmes of Richmond on securing a Second Reading for his Private Member’s Bill. I commend him also for all the work he is doing to encourage a fairer and more balanced society for everyone, regardless of an individual’s background.

I start by declaring an interest in that I come to this topic with a business background, both in the City and financial services, and with over 30 years’ experience in HR, including recruitment. I wholeheartedly share in the spirit of this debate. It is not right that in 2017 people are being held back from realising their full potential because they are unable to access opportunities that are kept for the privileged few. I have listened carefully to some disturbing anecdotes this afternoon, not least from my noble friend Lady Stowell and the noble Lord, Lord Mitchell. As I am sure my noble friend Lord Holmes is aware, the Government are committed to giving everyone a fair start in our economy. This includes people from socially disadvantaged backgrounds; black, Asian and minority-ethnic groups; women; and of course young people.

I touch now on the great progress that the Government have made in creating a stronger labour market for younger workers. This group has seen a growth in median earnings which has been stronger than average. The unemployment rate for this group fell by 1.4 percentage points between quarter 2 2016 and quarter 2 2017. The employment rate for 21 to 24 year-olds is now at a record high of 80%. We have clearly demonstrated that an increasing minimum wage can go hand in hand with increasing labour market participation.

The principles of the national minimum wage remain the same today as when they were introduced by the Labour Party back in 1999. It was introduced and designed to protect the employment prospects of the lowest-paid workers while ensuring that they received fair pay for each hour they worked. In April 2016, this Conservative Government went one step further by introducing the national living wage, which gave over 1.7 million people aged 25 and over a pay rise, leaving them with more money in their pockets. It is right that we continue to seek independent and expert advice from the Low Pay Commission when setting these minimum wage rates. The Government will continue to set an hourly minimum threshold which employers must adhere to, while commending those employers who pay more when they can afford to do so.

I turn now to the essence of my noble friend’s Bill. I am supportive of the good intentions that underpin the Bill and agree that it is right to stop the exploitation of workers. Let me be clear that by “exploitation” I am referring specifically to individuals who are working and should be paid the minimum wage but instead receive less than the minimum or even nothing—and we have heard some stories this afternoon to that effect. The Bill is right also in its adherence to the principle of giving everyone equal access to opportunities. It is right that this Government champion diversity.

I acknowledge the words of my noble friend Lady Wyld, who stated that unpaid internships are an open secret. The Government recognise that unpaid work experience is an issue and are committed to stamping out this exploitation when an individual falls within the definition of a “worker” for minimum wage purposes. However, I hate to disappoint the noble Lords, Lord Mitchell and Lord Haskel—and there is a “however” to this. The current legislation already sets out that all workers are legally entitled to the minimum wage; and most importantly, as my noble friend Lord Flight said in citing the excellent example of Metro Bank, that entitlement applies from day one. The entitlement applies regardless of how the employer or worker describes the relationship in a contract, which can be verbal or written.

Most employment protections in the UK apply to individuals who are defined as an employee or worker. There is no statutory definition of work experience or indeed internships. However, if it were to be defined, it is likely that a new employment status would need to be created, which in itself would open the debate about whether we extend further protections to this new category, such as holiday pay and sick pay. A new employment status is likely to create unintended consequences, such as businesses not offering any work experience opportunities or, at worst, encouraging rogue employers to seek loopholes by offering work experience for less than four weeks—funnily enough, for three weeks and six days, as my noble friend Lord Flight hinted—which would mean that individuals were not entitled to the minimum wage from day one.

I took note of the interesting speech from the noble Lord, Lord Winston, but I agree on this occasion with the noble Lord, Lord Mendelsohn. On the one hand, I understand the point that the noble Lord, Lord Winston, made about his particular sector and its highly technical area, and I take into account what he said about the opportunities in the NHS leading to further time being needed. But I was disappointed not to hear—unless he chose not to say—whether the workers were paid any expenses at all. The noble Lord may like to clarify that later. I understand his angle and where he was coming from.

As my noble friend Lord Holmes mentioned, the voluntary sector has existing legislation that covers volunteers and voluntary workers. The noble Lord, Lord Mendelsohn, also raised that. The key for volunteers, who are not legally entitled to the minimum wage, is that they have the flexibility to come and go as they please and they do not have any employment contract to perform work or provide services.

This Government will continue to encourage work experience, internships and voluntary opportunities. We want to encourage initiatives that provide individuals with an opportunity to watch and learn, to try their hand at particular tasks or give something back to their community. These opportunities are vital to so many individuals up and down the country. Their scope is so varied. This flexibility is beneficial for individuals and employers.

I am keen to focus also on the issue of social mobility, which featured heavily in today’s debate. Increasing social mobility is a top priority for the Government. Social mobility is essential to make our country one that works for everyone, not just the privileged few. We want to create a society that is fair and rewards talent and hard work. The education system and employers must be part of the answer to that. It is important for employers to increase the diversity of their workforce. The best employers are already taking some important steps, including engaging and supporting young people in schools, introducing fairer recruitment practices, removing barriers, opening up alternative routes to entry and monitoring progress. But there is more to do to ensure that background is not a barrier to a good career, and this Government are taking that challenge seriously.

The Department for Education is committed to working alongside the Social Mobility Commission to tackle the barriers that can hold people back from fulfilling their ambitions. We value the wide-ranging work carried out by the commission, including its work on a Social Mobility Employer Index. The index is a joint initiative between the Social Mobility Foundation and the Social Mobility Commission, in partnership with the City of London Corporation. It ranks Britain’s employers for the first time on the actions that they are taking to ensure they are open to accessing and progressing talent from all backgrounds and it showcases progress towards improving social mobility.

My noble friend Lord Holmes asked about Whitehall’s record on unpaid internships. I reassure him that we are taking the opportunity to enable social mobility in Whitehall. The Summer Diversity Internship Programme is a multi-award-winning programme that gives individuals from diverse backgrounds the opportunity to see what a career in the Civil Service is like, and 100% of those surveyed would recommend it. I reassure the House that it is paid.

My noble friend Lady Brady raised the important point about careers advice. The Government are taking steps to improve careers education and guidance for all ages. We are investing more than £70 million this year to support young people and adults to get high-quality careers provision.

Activities involving employers such as careers insights, mentoring, work tasters and work experience are crucial to giving young people the skills they need to succeed. The careers statutory guidance makes it clear that schools should offer work placements, work experience and other employer-based activities as part of their careers strategy for years eight to 13 pupils. We are providing valuable support for schools through the Careers & Enterprise Company, which has been tasked with increasing the level of employer input into schools and colleges.

Part of the issue is enforcement. It is about enforcing the existing legislation to enable social mobility. To be clear: it is against the law for employers not to pay at least the minimum wage to workers. We want work to pay and to have zero tolerance for employers opting out of their legal responsibilities. This is part of the reason that we have increased HMRC’s enforcement budget to a record level of £25.3 million for 2017-18. These two points were raised by my noble friend Lord Holmes. We want to stamp out any temptation to pursue non-compliance, so we have increased the maximum penalty imposed on an employer. Last year the penalty doubled to 200% of arrears owed to workers up to a maximum of £20,000 per worker. We have also continued the Government’s naming scheme, which has become increasingly effective as a deterrent. We have named more than 1,200 employers to date and we can see its effectiveness from the number of representations we get from employers seeking to be exempt from the naming process. There is a growing realisation among employers that naming can damage brands.

We also recognise that we have a responsibility to make sure that individuals and businesses—

Photo of Lord Mendelsohn Lord Mendelsohn Shadow Spokesperson (Business, Energy and Industrial Strategy), Shadow Spokesperson (International Trade)

I am sorry for interrupting the Minister, but in reciting those numbers about the budgets and enforcement measures that are available, can he state whether they relate to HMRC’s activities in general? Which part of the budget or of those sums relates to interns?

Photo of Viscount Younger of Leckie Viscount Younger of Leckie Lord in Waiting (HM Household) (Whip)

I will write to the noble Lord about the specific figures relating to interns. I sought to make the point in general that in having the naming scheme, when the names go up on the board or when they are broadcast, particularly in local newspapers, it is damaging in itself. It is perceived as being more damaging and obviously can sully the reputation of employers in terms of both recruitment and the products that they are selling.

We also recognise that we have a responsibility to make sure—

Photo of Lord Flight Lord Flight Conservative

My Lords, I thank my noble friend. Can he clarify a point? Is he effectively saying that in the future interns will count as workers? The problem, as I understand it, is that of greyness in the area.

Photo of Viscount Younger of Leckie Viscount Younger of Leckie Lord in Waiting (HM Household) (Whip)

That is true, and the point I am making is that the existing legislation does allow for a distinction to be made between who is defined as a worker and who is not. I have already made it clear that there are employers who try to get around this, a point which has been made by other noble Lords. However, the law is clear: if there is evidence to show that an individual can be defined as a worker in that work is being done that is not work experience, actions can be taken.

Photo of Baroness McIntosh of Hudnall Baroness McIntosh of Hudnall Deputy Chairman of Committees, Deputy Speaker (Lords)

My Lords, I am sorry to press the noble Viscount on this matter. I have listened to the whole of the debate, and the issue of the law being in some way evaded has come up on a number of occasions, but it does not appear from what has been said that on every occasion when this happens, what is being done is evidently illegal. In other words, it appears that there are easy ways of moving around the obstacles that are put in the way by the current legislation. Can the noble Viscount tell us whether any employer has been prosecuted so far for evading the law in this way, and who is responsible for bringing forward a prosecution? I ask this because it appears from what has been said in the debate that the responsibility lies with the person who has not been paid or who feels themselves to have been disadvantaged.

Photo of Viscount Younger of Leckie Viscount Younger of Leckie Lord in Waiting (HM Household) (Whip)

In response to the point made by the noble Baroness, there have been some prosecutions, and we think that they will increase as the measures that we are taking improve. It is true that if an individual undertaking work experience has an issue, they have the right to approach ACAS on a confidential basis, so they will be able to complain about the treatment they have received. I will come on to that because there is a little more that I can say about it. They can also go to a citizens advice bureau. The confidential aspect is terribly important. Another noble Lord made the point that it is not always very easy for a young person who is trying to get on to complain in that way, so there is more work to be done.

As a result of the additional resources that I have mentioned, HMRC has been able to effectively run the Promote programme. Promote provides information to both employers and workers to tackle non-compliance before it occurs. In 2016-17, the Promote team reached over 250,000 employers, workers and their intermediaries through a combination of webinars, targeted mailshots, face-to-face contact, digital contact and project work with specific sector bodies. We hope to see this number increase as the year progresses. We want to continue to support workers and businesses, particularly our small businesses, of which there are over 5.4 million. We want to raise awareness of the law to improve compliance so that business feels empowered to offer these types of opportunities to everybody.

I will give the noble Baroness a little more detail. ACAS offers a free and confidential phone line providing advice for workers and employers. Any worker who thinks that they may be underpaid or, wrongly, not paid at all should contact ACAS or Citizens Advice. We recognise that workers may not feel confident enough to make a complaint about their employer, especially if they are starting out in their career, as my noble friend Lord Holmes said. Therefore, ACAS offers a confidential service; the complainant can remain anonymous. If there is a case to answer, ACAS will forward the case to HMRC, which follows up every single complaint.

I turn briefly to the Taylor review, which was raised in the debate. As my noble friend Lord Holmes will be aware, the Government are committed to stamping out exploitative work experience. Earlier this year, the Prime Minister asked Matthew Taylor to run an independent review into the UK’s modern employment practices. Matthew looked at a number of themes, including the issue of unpaid interns. The report is comprehensive and detailed. I note that Matthew Taylor did not recommend legislative change but, instead, focused on increased enforcement—a point that I made earlier. However, the Government will give the review the careful consideration that it deserves and we will respond in full later this year.

In fact, Matthew Taylor’s recommendation is particularly relevant to this Private Member’s Bill—a point raised by my noble friend Lady Stedman-Scott. The report states:

“The Government should ensure that exploitative unpaid internships … are stamped out. The Government should do this by clarifying the interpretation of the law and encouraging enforcement action taken by HMRC in this area”.

I make it clear that I welcome the sentiments and intentions of my noble friend. Noble Lords should rest assured that we will create the conditions necessary for all workers to receive the minimum wage that they are entitled to. We want every individual to have the best chance in life. We also want every young person to have the opportunity to experience what the working world is like. My noble friend Lady Stedman-Scott raised the interesting idea of the Government perhaps working harder to penetrate so-called “opportunity areas”. I have taken note of her point and will pass it on to the relevant department.

Photo of Baroness Morgan of Huyton Baroness Morgan of Huyton Labour

With respect to the noble Viscount, can he explain more clearly why we should “rest assured”, as he said? In this debate there has been strong support from all sides of the House for a simple clarification and change to the law that will deliver what we are all seeking, which is the differentiation between work experience and an unpaid internship. However, nothing that the Government have done has changed the situation. In fact, if anything, it is getting worse—we have heard about lots of real-life examples in the House today. Therefore, with the greatest respect, I am not convinced that the Minister has set out anything that leaves any of us who have spoken feeling that we can rest assured.

Photo of Viscount Younger of Leckie Viscount Younger of Leckie Lord in Waiting (HM Household) (Whip)

Two or three Peers have said that there are flaws in the Bill. I would not necessarily go that far, but the tenet of my argument is that it is enforcement that counts. As I said earlier, we are making great efforts to improve enforcement in this area. The point is that there has to be a distinction between the different types of work. If somebody is defined as a worker, they are doing work for which they should receive remuneration from day one; otherwise, we could be led to form a new definition of, say, a work experience worker, but I have made it clear that we believe there would be some unintended consequences in so doing.

Photo of Lord Mendelsohn Lord Mendelsohn Shadow Spokesperson (Business, Energy and Industrial Strategy), Shadow Spokesperson (International Trade)

Will the Minister clarify—because, like Matthew Taylor, he mentioned making sure that the law is clear on this—and describe the difference between an internship as work experience and an internship as work?

Photo of Viscount Younger of Leckie Viscount Younger of Leckie Lord in Waiting (HM Household) (Whip)

The description is that any complaint goes to HMRC and, if a complaint has been made, a distinction has to be made and HMRC has to take a view on whether meaningful work is being carried out—in other words, a nine-to-five day is being done, not just work experience where somebody is looking over somebody’s shoulder. That distinction has to be made. Again, I make the point that we could go down the route of having a new definition under the heading, “Work Experience”, but that would lead to all kinds on unintended consequences.

Photo of Lord Flight Lord Flight Conservative

I am sorry to bother noble Lords again. The fundamental issue seems to be whether the Government want interns to get paid. We all know what interns do. They are not workers because they are not on contract; but, if they are not paid, the problems we have all talked about arise.

Photo of Viscount Younger of Leckie Viscount Younger of Leckie Lord in Waiting (HM Household) (Whip)

We are not taking a view on that. We are saying that there is no definition of work experience and it is left for others to decide whether the work is proper work that deserves remuneration or whether it comes under the description of somebody coming in for a couple of days and looking over somebody’s shoulder.

Photo of Baroness Stowell of Beeston Baroness Stowell of Beeston Conservative

I wonder if I might assist my noble friend. One of the things I find quite helpful, from what he said in his remarks, is knowing that the Government are still considering how they will respond to Matthew Taylor’s report. I did not realise that until my noble friend said so. We have clearly had a very good debate, with some strong and forceful arguments. I would have thought quite a few of us would welcome the opportunity to sit down with the relevant Ministers—perhaps in BEIS—who are looking at and considering how to respond to the Taylor review, and have some real influence on the Government’s response to that set of recommendations.

Photo of Viscount Younger of Leckie Viscount Younger of Leckie Lord in Waiting (HM Household) (Whip)

I am grateful to my noble friend for her helpful input. I was keen for the debate not to fall back on the Taylor review, because my noble friend is quite right that, as I have said, we are considering our response to it. I have been careful not to go either way. The debate is extremely helpful in allowing us to give a measured response. I take the point my noble friend made that responsibility lies with the business department—BEIS—but the DfE also has a strong input in a cross-departmental way.

Going back to the definition of work, it is explained in guidance. There is also a £1.5 million awareness-raising campaign to make people aware of what is and is not work. It boils down to that.

Photo of Lord Holmes of Richmond Lord Holmes of Richmond Conservative 1:23 pm, 27th October 2017

I thank all noble Lords for taking part in the debate and for their support for the Bill. It is invidious to mention any particular noble Lords, but I will briefly pick up on a number of points that were made, if I may.

First, I agree with the point made by my noble friend Lord Flight about start points. As I mentioned in my opening remarks, my start point was zero weeks. Having four weeks in the Bill does not stop the clock ticking from day one, but it helps to define the period between what is and what is not work experience. I would certainly be happy to have more discussions on that point.

I am sad that the noble Lord, Lord Winston, does not like the Bill—I still like his television programmes. Perhaps I can help him out on one point—I hope so. He mentioned tidying up the ladies’ gym. I see no difficulty under the legislation—it is quite clear in that example that he was not a worker but a volunteer.

I was surprised by the noble Lord’s speech because I felt that many of his arguments actually made the case for the Bill. It is fine and a lovely thing to be able to help your children, but while Joel is in the lab working away and doing great things, what about Jack, or indeed Jane, from South Shields, who are able to watch the noble Lord on television but have very little opportunity to break through that glass screen? Without wanting to trespass on family issues, I say to Joel Winston that, having seen hundreds of thousands of pounds put into not fixing that piece of equipment, as the noble Lord set out, if I were him I would feel at least a little aggrieved to not receive any remuneration when undertaking tasks that were not only work but were clearly beneficial to the lab to the tune of hundreds of thousands of pounds.

Photo of Lord Winston Lord Winston Labour

I mentioned Joel only as a bit of a joke. If the noble Lord looks at my record in my laboratory he will see that we have helped endless numbers of young people with work experience. Wherever possible we have tried to promote them thereafter, as we did with the last person I talked about, who would probably not have got into medical school and would certainly not now be a stellar performer in science. Their PhD was also supported through our charitable work. To be fair, I mentioned my privileged son only because of the underprivileged people we regularly see and want to help. I am not totally against the noble Lord’s Bill—of course I am not—but I want to see it adjusted in Committee to ensure that we do not prevent people properly accessing work experience.

Photo of Lord Holmes of Richmond Lord Holmes of Richmond Conservative

I thank the noble Lord and I accept his point. I look forward to discussing those points as we get to further stages. The intention is absolutely to have work experience opportunities—internships if they go on longer—not only paid but available to the broadest breadth of talent across the country.

The noble Lord, Lord Thurlow, raised a very interesting point. It is certainly one to discuss further as we progress. There is a potential danger in identifying any particular group of people and seeking to differentiate them. As he rightly and sensitively set out, it is clearly a difficult issue, but to differentiate too significantly could be problematic and may have at least the echoes of arguments made in previous decades on gender pay.

This has been a fantastic debate. I am clearly absolutely behind the principle. I am not totally, 100%, die-in-a-ditch committed to every last dot, cross, “i” and “t” in the Bill. As I said to the Minister at the outset: if not this Bill, what Bill? My mission is quite simply this: current legislation is clear and clearly is not working. I hope that the Bill is not a Rubiconic leap, a lunge or a blast into space, but merely a focused, targeted, thought-through tweak to existing legislation to bring clarity and to bring people within the law to enable them to have their rights and to be paid for the work they undertake.

Unpaid internships are a stain on our society, a drain on social mobility and desperately Dickensian. They are something of the past that I believe should be firmly committed to that past. We have the opportunity today to take the next step towards condemning unpaid internships to that past. In thanking all noble Lords who have contributed once again, I ask the House to give this Bill a Second Reading.

Bill read a second time and committed to a Committee of the Whole House.