Justin Madders MP gave evidence.

We now come to the finale—the Minister. Can you briefly introduce yourself for the record, please?

Justin Madders:

Good afternoon. My name is Justin Madders. I am the Minister for Employment Rights, Competition and Markets. I also state for the record that I am a member of the GMB and Unite trade unions.

Q I am slightly bemused by having a member of the Committee also answering questions. Many of the things that I and my colleagues from the official Opposition will be asking you will come in the line-by-line sessions in the coming weeks, but may I briefly ask you about the Regulatory Policy Committee? I fully appreciate that you are going to want to stand by your Bill and defend it rigorously, and fundamentally I am not going to criticise you for that, because that is your job. However, it is pretty unusual in the legislation of this Government and previous Governments of all political persuasions—I accept that we are still in early days—to have a body such as the RPC so comprehensively say that the impact assessments are not fit for purpose. Do you accept any of its criticisms, and what are you and the Department doing to answer those criticisms?

Justin Madders:

Thank you for the question. I think the first thing to say is that it is not that unusual. In the last three years, there have been 10 red-rated Bills. Obviously, as the shadow Minister, you will be aware that it was your Government that introduced those. I think there is a challenge here that that all newly elected Governments face: obviously, we have a clear manifesto commitment to deliver on our agenda to make work pay and a clear manifesto commitment to introduce the legislation within 100 days of taking office. That means that, by definition, there is not the time and scope for the normal dialogue and informal conversations that you would get between the Department and the RPC before the final impact assessment is published. I think there is a fundamental challenge there.

As you would expect, we undertook quite a lot work in opposition to develop our policies, but because that is not part of the formal process, we were not able to take that into account. The alternative was for us to wait six or 12 months before we got that impact assessment into a position where the RPC was happy with it, and I do not think the public would really forgive us for having that hiatus between taking office and legislating.

It is also worth saying that, if you look at the individual assessments, two thirds of them have been greenlit, so they are getting approval from the RPC. We acknowledge that there is more work to do on some of them, and we will continue to work with the RPC. I also have a little sympathy with some of the difficulties that the RPC had in coming to its conclusions.

A good example of that is the repeal of the Strikes (Minimum Service Levels) Act 2023, which the RPC has noted was red-rated when it was introduced as a Bill anyway. As that Act was poorly evidence-based in the first place, and has never actually been used since it came into force, it was very difficult for the RPC to have any real evidence on what the impact of a repeal would be. Our critique would be that the reason for that is because it was unworkable anyway, but I understand in the circumstances why the RPC would have some difficulty making a judgment on that.

On some of the other measures where it said that there was no evidence base, such as some of the equalities measures, we heard some pretty clear evidence both today and on Tuesday—for example, from the Fawcett Society and Pregnant Then Screwed—about some of the real impacts on individuals of the policies in the Bill. I would also say that I do not think there was any real evidence that there is not a need for this legislation. The general thrust from most witnesses was that this Bill would deal with some of the challenges in the labour market. Although not every witness said that, that was generally the case. Of course, as we move forward and get more evidence, we will happily work with the RPC to try to improve those reds to greens.

Q Thank you for that answer; we will explore that more in coming weeks. I accept the political narrative of doing something in 100 days. That is well-established for Governments around the world, and Conservative Governments in the past may well have been guilty of it too. However, this is a big, reforming piece of legislation—I might not agree with all of it, but I accept that it is a big, reforming piece of legislation, on which we have heard a lot of evidence. It is obvious to anyone who reads the Bill that it has an extraordinary requirement for secondary legislation down the line. Beyond the political optics, was there any reason to get it published in 100 days, given that you have a mandate of five years through to August 2029?

Justin Madders:

I think it is important that we stick to our promises, and this measure was very popular with the public during the election. I think they wanted to see action quickly. We have had 14 years of atrophy and decline in the labour market—you are obviously not going to agree with that comment, but that would be our analysis—so the need to act quickly was there. A lot of these provisions will not actually become law for a number of months, if not years—in particular unfair dismissal, which we are saying will come in in autumn 2026 at the earliest. There is an awful lot more time to continue to engage and consult, and we intend to do that. Of course, because of the very detailed nature of employment law, a lot of it is developed in secondary legislation and also codes of practice. That is the completely normal practice, and that is why a lot of it is framed in this way.

Q I have two more points, if I may. First, clearly, some of the most striking evidence we heard that did not agree with much of the Bill was from Luke Johnson and Michael Lorimer earlier. Do you feel that the Government have engaged those who run businesses and employ people in the private sector, as opposed to representative bodies of businesses, enough in the research and drafting of the Bill?

Justin Madders:

Yes, I do. I have to say, I did not agree with much of their evidence. I think it would be fair to say that they are outliers in what we heard while we engaged with businesses. Most businesses understood the importance of engaging and of enhancing workplace rights, and see the benefits of it. I can provide you with a list of all the organisations we have engaged with. It is certainly over 140 organisations. The majority of those are employers or employer organisations, so I think we have been pretty comprehensive. We are continuing that next week and will continue to do it for the rest of the Bill’s passage.

Q I hope my last point might be more consensual as we move forward. I was very sympathetic to one of the sides of this coin before the Committee started, and the evidence today has given me food for thought on the other one. The first part is bereavement leave in the event of pregnancy loss, which is a position I have a lot of sympathy for. The other is the differential we heard about from Dr Stephenson around maternity pay versus maternity allowance and how that intersects with universal credit. I thought that was a powerfully made point. I am not expecting a cast-iron answer now, but are the Government willing to consider changing the Bill to incorporate those two asks?

Justin Madders:

I have sympathy with what was said there. The first thing to say is that the rates for maternity leave and allowance are set by the Department for Work and Pensions. I probably cannot say much more than that at this stage, although I have had some initial discussions with that Department about what we can do to reform this area, because we recognise that it is quite an outdated system.

And on bereavement leave?

Justin Madders:

Again, that is something I am sympathetic to. I understand that the Women and Equalities Committee is undertaking an inquiry on that at the moment, and we are going to see what it says.

Q I have three short points to make. I am assuming that you are quite concerned that we have heard various sides talk about the fact that the Bill will not encourage employers to take on new staff. That goes strongly against what you are hoping to do in terms of getting Britain working again, which is something to be applauded. I am particularly concerned about how small businesses will cope with the changes on probation periods, and I wonder whether you will be prepared to consider changes to those periods.

Justin Madders:

There were two questions there. On probationary periods, there will be more work done on that. The evidence that I picked up is that most employers feel that six months is about the right period. The reason why we have expressed a preference for nine months, which we are obviously engaging on anyway, is that we recognise that there will be occasions when people might be on the cusp of being hired or fired at that point and the employer just wants a little bit more time to work with them. We think that is a reasonable point, and we have responded to employers’ concerns on that.

As we move forward with this legislation, we will certainly be looking to ensure that all businesses, particularly small businesses, have readily available and easily understandable resources so that they know what they need to do. We do not want to pass a lot of laws that allow employers to fall into traps. We want them to comply with best practice, which is what we are trying to set out in this Bill.

Q I have to say that if you considered that to be two questions, then I have four. My second question—your third—is to do with the fact that we have had quite a lot of evidence concerning sick pay and the fact that it is so much lower than almost everything else. As any employer will know, having employees limp in when they are sick is counterproductive to them getting better and being on 100% form, and it affects those who are not sick. Is the amount of pay for people on sick leave something that you are interested in considering?

Justin Madders:

I think we all recognise the point that was made by a number of witnesses. I think that even Matt Hancock, when he was Health Secretary during the pandemic, said that he did not think that SSP was at a rate that anyone could live on. It should be pointed out, though, that this is within the remit of the Department for Work and Pensions; the Secretary of State has the ability to set the rate, and I cannot really tread on their toes. We recognise that at the moment there are several million people who do not qualify for statutory sick pay at all. Our focus in this Bill is on making sure that they qualify for that right.

Q Fair enough. My last point is one that was made earlier by one of our witnesses—it possibly also comes under the Department for Work and Pensions—about losing your universal credit when you take on employment. If that employment is flexible because that is what you need in order to get yourself back into work in a gradual way, because that flexible work can vary, you can end up—I have cases of this in my constituency—trying to juggle the numbers between what you are entitled to in universal credit and what you think you will earn, only to find that you did not earn that much, or earned slightly more and are penalised. I have to say, having sat down to try to do the maths with people in that situation, that it was unbelievably complicated to work out whether they were in breach or not. I feel that some kind of simple guidance is needed—I can imagine there being a website where you just put the numbers in and it tells you—so that people do not feel so scared about taking on part-time or flexible work while claiming universal credit.

Justin Madders:

I take the point. I do not want to deflect, but that is really for the Department for Work and Pensions. What we are trying to do with flexible working is to make sure that as many people as possible are able to work in circumstances that suit them. We think that if we get this right, it will be transformative for lots of people who are locked out of the labour market at the moment, and that is what we are trying to achieve.

Q May I ask about the evidence we heard about industrial relations, both from representatives of business and from the many trade unions that we have heard from? How do you see this Bill affecting industrial relations in Britain, and what do you think will be the long-term impact of that on the economy?

Justin Madders:

Over the last 14 years, there has been a pretty hostile environment for trade unionists. That has been ramped up in recent years, which is why we have seen in the last couple of years the highest number of industrial relations disputes for about 40 years. The solution is not to continue to legislate to make it harder for people to strike; it is actually to change the culture and attitude towards industrial relations.

We are trying to make sure that trade unions have the opportunity to operate on a level playing field, and I think that we have heard plenty of evidence from both employers and trade unions that when there is a constructive relationship, businesses benefit and individual workers benefit. There is plenty of evidence that trade union members usually have better pay, and better terms and conditions—that is recognised throughout the world—and that is something that we want to help facilitate under this legislation.

Q Do you personally want to see increased unionisation in Britain, and do you hope and/or expect that the Bill will deliver it?

Justin Madders:

I think that is actually a challenge for the trade union movement. I think that they would accept that this is really up to them. Personally, as a trade union member and someone who has been actively involved in the trade union movement for many years, I see the absolute advantages and benefits of being a trade union member, but it is really up to them to get into the workplaces, explain their advantages to the workforce and then engage on a tripartite basis with Government, business and workers to improve everyone’s working lives.

Q Thank you. Can you name a CEO of a real business—not a representative body—employing more than, say, 100 people who would say that this Bill is unambiguously good for the economy? How many of them do you think there are?

Justin Madders:

I would imagine that there are quite a few.

Can you name some?

Justin Madders:

I cannot name individual CEOs. Octopus has been very positive, Sainsbury’s has been very positive and, as we heard today, the Co-op has been very positive. I think the CBI welcomed the Bill and welcomed the engagement as well, and Make UK too. There are quite a lot of organisations on the employer side that are generally welcoming of the intentions of the Bill, and I think that has been reflected in the evidence.

Q But the only real businesspeople who have been here have been unambiguously against it.

Justin Madders:

I think you will find that the Co-op is a real business, and it employs an awful lot of people.

That is true. That is a correction.

Q Minister, we have touched on adult social care today. There are 1.6 million workers in the sector. I know that news of the adult social care negotiating body has been warmly welcomed. Can you expand on why a fair pay agreement is so important for the adult social care sector?

Justin Madders:

That is a really good question. One of the reasons was in your question—there are 1.6 million people employed in the sector. It is a huge part of the economy. Unfortunately, at the moment, as we heard in the evidence, it is characterised by poor terms and conditions and high numbers of zero-hours contracts, and quite often minimum wage is not enforced properly. These are people doing really important jobs in our society. They deserve a voice and a collective opportunity to raise terms and conditions, and the opportunity to work with employers to develop a career path. This is a transformative structure that will hopefully change the lives of many working people and, of course, the people they care for.

Q We heard from two business voices today that were not perhaps entirely reflective of the rest of our views. I have more than 12,500 businesses in my constituency of Stratford and Bow, of which more than 5,500 are small and medium-sized businesses. I have met lots of them over the course of the last year. I have certainly not heard similar views. We also heard from legal experts, who said that the Bill brings us closer to OECD norms than perhaps was said. Can you tell us how businesses will benefit from the Bill?

Justin Madders:

There is generally an acceptance, both in the economic analysis we have heard from some of the witnesses today and from businesses themselves, that getting a motivated, engaged and retained workforce is good for productivity and the business overall. Having a more engaged and well-remunerated workforce has been shown to actually boost profits. The fact that the OECD was referred to by the Resolution Foundation as a body that believes that greater workers’ rights actually improve the economic outcome of the country is a really important factor that we need to emphasise.

Q Picking up from the last question, we have heard how the Bill will benefit employers; what other groups of people in the country do you think it will benefit?

Justin Madders:

There are an awful lot of people who will benefit if we get this right. I am talking about people who do not know from one week to the next how many hours they will have or whether they will be paid enough to put food on the table. Our reforms on zero-hours contracts will really help with that. People who can be arbitrarily sacked for no reason for the first two years of their employment—about 9 million people—will benefit from that. The 1.6 million people in the social care sector will benefit. There are 900,000 people a year who will benefit from bereavement leave entitlements. Overall, as ACAS has suggested, the cost of disputes to the economy can be up to £30 billion a year. Just imagine what a difference it would make if we could shave a fraction off that. I think that the Bill is setting a new culture in our country about how we do workplace relations. It is putting the value of the worker/employee relationship with businesses at the heart of everything we do.

Q Seven children in every classroom of 30 in my constituency of Penistone and Stocksbridge are in poverty. Can you set out more broadly the economic benefits of the Bill, many of which were set out in the TUC’s report this week? In particular, while you have mentioned some just now, can you focus on the economic benefits for working people and working families?

Justin Madders:

Obviously, the TUC report is not an official Government document, but it has some interesting figures. It reckons that we could gain up to £974 million from reducing the number of days that people take off due to stress and anxiety because of poor working conditions; another £930 million a year from improved staff wellbeing; £168 million a year from improved minimum wage compliance; £510 million a year from reduced industrial action; £8 billion a year, potentially, from improved industrial relations; and up to £2.6 billion a year from increased labour market participation—there are a number of reasons why that might be the case. We do not know how much of those figures will be delivered, because an awful lot of variables are in there, but it is an impressive attempt to quantify, in a way that we cannot, given the rules of Government the positive impacts of the Bill on the wider economy.

Q Minister, you spoke earlier about some of the engagement you have had on the Bill, and some of the witnesses earlier today spoke about tripartite meetings that they had been at between the Government, unions and businesses. Could you set out some of your planned future engagement on the Bill?

Justin Madders:

Engagement continues, and there will be more next week—we are meeting a group of small and medium-sized businesses—but to date 140 different stakeholders have attended official or ministerial meetings. You will have heard from many of the witnesses that they have been quite impressed, I think, with the level of engagement and how we have listened to concerns expressed about the Bill. We also undertook extensive engagement in opposition. We will continue to do that. We are moving through some live consultations at the moment. As we develop the Bill and some of the regulations and codes of practice that will follow it, there will continue to be engagement throughout. We are very clear that that is the best way to deliver excellent legislation, and we will continue it.

Q Minister, over the past two years, we have seen some of the highest levels of industrial action since the 1980s. Could you tell us what effect you think the Bill will have on the conduct of industrial relations?

Justin Madders:

I hope it will have a positive impact on industrial relations. The way strike action spiralled in recent years was probably the result of frustration with a Government who were not listening to the voice of workers, were not prepared to address their concerns, and were actively moving to frustrate legitimate acts by trade unions to take industrial action. It is about the culture and the level of engagement, as much as it is about the legislation, but there is no suggestion, as far as I can see, that the Bill will massively increase strike action, as some people might have suggested.

As there are no further questions, I thank the Minister on behalf of the Committee for his evidence.

Ordered, That further consideration be now adjourned. —(Anna McMorrin.)

Adjourned till Tuesday 3 December at twenty-five minutes past Nine o’clock.

ERB 25 Dr Michelle Weldon-Johns, Senior Lecturer in Law at Abertay University

ERB 26 Fawcett Society

ERB 27 Ewan McGaughey

ERB 28 Cruse Bereavement Support, Hospice UK, Marie Curie, the National Bereavement Alliance and Sue Ryder (joint submission)