Industrial Action legislation is unsupported by any robust evidence to prove its effectiveness says Lords Committee

The Committee has expressed considerable concern regarding the draft Conduct of Employment Agencies and Employment Businesses (Amendment) Regulations 2022 (the draft Regulations). The purpose of the draft Regulations is to permit employment businesses to supply agency workers to an employer to replace workers who are taking part in an official strike or other industrial action. This practice is currently a criminal offence.

The report highlights issues including:

Impact Assessment

• The Committee was disappointed to note that, at the time of laying the draft Regulations before Parliament, no Impact Assessment (IA) had been provided by the Department of Business, Energy and Industrial Strategy (BEIS). In fact, BEIS only provided an IA after the Committee wrote to the Secretary of State about the lack of an IA – the Department had cited final quality assurance checks as a reason for the delay.
• The Committee’s report highlights that the requirement that instruments must be laid with all the supporting information available is an essential one to allow for proper and effective parliamentary scrutiny which starts when an instrument is laid before Parliament. The Committee expresses regret at the poor internal planning by BEIS, given that final quality assurance checks of an IA should be part and parcel of putting any legislation before Parliament. The report emphasises that in this case the oversight was particularly regrettable because BEIS, through the Better Regulation Executive, has overall responsibility for IA policy and should therefore be leading by example.
• In addition, the report expressed the Committee’s disappointment in the quality of information contained in the IA, in particular as the Secretary of State acknowledged that it was impossible to “robustly estimate” the impact of the policy due to a lack of evidence. The Committee’s report also notes that the published IA is “De Minimis”, suggesting that any net benefit for businesses is expected to be below £5million per year. The Committee concludes that the lack of robust evidence and the expected limited net benefit raise questions as to the practical effectiveness and benefit of the proposed changes.
• The Committee expressed concern, also highlighted in submissions made by the Trades Union Congress and the Recruitment and Employment Confederation, that the policy change proposed by the draft Regulations was consulted on in 2015. Asked whether it was appropriate to take forward a policy based on conclusions reached seven years ago, BEIS told the Committee that the consultation in 2015 had been thorough and had generated a large number of responses and that it was the Government’s view that any changed circumstances in the intervening years were not relevant to the proposed policy.

Devolution

• The draft Regulations are to apply to Great Britain; this means that employment businesses in England, Wales and Scotland would be permitted to supply workers to employers to cover strikes. While in England and Scotland all employers across the public and private sectors would be free to use temporary staff to cover strikes, in Wales, employment businesses “would be permitted to supply workers to employers (including devolved Welsh authorities)”, but the devolved Welsh authorities “would not be permitted to hire them”. According to BEIS, this is due to provisions in the Trade Union (Wales) Act 2017 (“the 2017 Act”), which currently limit the effect in Wales. The Explanatory Memorandum states that “the UK Government intends to legislate to remove the 2017 Act through primary legislation when Parliamentary time allows, to ensure trade union legislation applies equally across Great Britain”.
• The Committee expressed considerable unease about the devolution aspect of the draft Regulations and the Government’s declared intention to repeal the 2017 Act, noting that similar concerns had been expressed strongly in the Welsh Senedd. The Committee takes the view that while it is outside its remit to comment on whether the Government’s intention is in line with the devolution settlement, this question is nevertheless constitutionally highly sensitive and, given this sensitivity, there should have been an earlier and more comprehensive engagement with the Welsh Government and Senedd on the draft Regulations. The report notes the Secretary of State’s commitment to further engage with the Welsh Government on the repeal of the 2017 Act.

Lord German, Member of the Secondary Legislation Scrutiny Committee, said;

“We have made the point repeatedly – most emphatically in our November 2021 special report Government by Diktat – that it is imperative departments should provide sufficient explanatory material, including Impact Assessments (IAs) where required, to allow Parliament to carry out thorough and effective scrutiny of secondary legislation and to properly state the purpose, justification and operation of an instrument. Every time an instrument is laid without the supporting material, this undermines our ability and the ability of Parliament more generally to perform this necessary scrutiny duty.

“It is highly regrettable that BEIS failed to provide an IA when the draft Regulations were laid before Parliament, and only complied two weeks later after being prompted to do so. The fact that this Department, via the Better Regulation Executive, has overall responsibility for the policy on IAs and should be taking the lead on improving their quality is the cause of understandable concern for us.

“In addition, the fact that the IA which was eventually provided by BEIS was unable to “robustly estimate the size” of the policy’s impact because of a lack of evidence raises questions as to the effectiveness of the change proposed by the draft Regulations.

“The devolution issue with regards to the repeal of the 2017 Welsh Act also causes us considerable disquiet given its constitutional sensitivity. The House may wish to press the Minister for more information on all the issues highlighted in our report.”

The Committee also considered the Liability of Trade Unions in Proceedings in Tort (Increase of Limits on Damages) Order 2022 (SI 2022/699). The purpose of this instrument is to raise the cap on damages that can be awarded against a trade union for organising, endorsing or authorising unlawful strike action. This will be the first increase in the cap in 40 years. The Department told the Committee that, in practice, the award of damages against trade unions was “very rare”.