Contribution
My Lords, at Second Reading in March—nine months ago, although it feels longer ago—I said that
“the Bill will damage growth and, most importantly, the employment opportunities of the most vulnerable people”.—[Official Report, 27/3/25; col. 1907.]
After nine months of debate and scrutiny, it is less damaging, but I still believe it is not a good Bill. It still piles cost and regulation on businesses and on the public sector at a time when we should be doing exactly the opposite.
But this House has done its job well and responsibly. We have pointed out the unintended consequences that the Bill may have, the potential damage to the employment prospects of the young and others, and the disproportionate impact on the backbone of our economy—smaller businesses. We have given the other place several opportunities to think again and, to be fair, it has done so in a number of areas. In particular, the Government have compromised on what I believe was the most damaging aspect, day-one dismissal rights.
We have also quite rightly registered our constitutional disapproval of the introduction of a material change at the very last minute—the abolition of the cap on unfair dismissal, which is the subject of Motion A. The Minister stated last week that the amendments were “context- and Bill-specific”. I take this and her reference to
“discussions with the Leader of the House on how she and other Members would like to conduct business more regularly”—[Official Report, 10/12/25; col. 276.]
as confirmation that the Government accept that this should never be seen as a precedent. This House would be right to reject it if it were ever used as a precedent in the future.
I have a lot of sympathy with the Motion proposed by the noble Lord, Lord Sharpe, but I am afraid I will not support it at this stage. We are in danger of over- egging the impact of the removal of the cap. I do not support it, but the water bosses, for example, will be remunerated if they are fired for contractual reasons, which is unlimited anyway. It is not going to be under the unfair dismissal rules. I am not convinced that it makes an enormous difference, but the noble Lord is quite right that we do not have an impact assessment yet.
Despite our giving it the opportunity to think again on many aspects, the other place has disagreed with our changes and decided that it wants to go ahead. That now also includes the cap on unfair dismissal claims. The time has come for us in this House to respect the will of the elected Chamber and let the Bill pass, regardless of any remaining concerns that I and many others still have. I will vote against the amendment for that reason.
I end with a final plea to the Minister. She will be aware of the latest employment figures and the worsening trend. She will also be aware that what the ONS described as this “subdued labour market” is disproportionately affecting young people. We should all be very concerned about that. The Resolution Foundation is also clear on this:
“As is typical in economic downturns, young people have been hit hardest. With unemployment expected to stay elevated, Government should be cautious about any further increases in labour costs”.
Much of the implementation of this Bill will be by regulation, which will follow over the coming years. I urge the Minister to ensure that the concerns that have been raised in this House and elsewhere are kept front and centre, and that the unintended consequences that may arise, especially for young people, are thought through very carefully while the regulations are being created.
It was encouraging that the Government listened to business organisations in the later stages of the Bill, especially around the unfair dismissal question. I urge the Minister to ensure that the Government continue to listen constructively to the concerns of those who will create the growth and jobs that will drive the economy, and especially that they make a much greater effort to hear the concerns of smaller businesses which are feeling rather ignored and concerned at the moment. That said, it is time to let the Bill pass.