My Lords, in engaging with this issue, your Lordships’ Committee has had the benefit of comprehensive speeches by my noble friend Lady Hollis and, despite her reluctance, my noble friend Lady Drake. Between them they have
demonstrated a level of adequacy on the detail of this which, for the rest of us, makes her feeling on following our noble friend Lady Hollis pale into insignificance.
In the interest of brevity I intend to ignore a substantial number of the notes that I have before me and engage with just two issues in order to focus the Minister’s mind on them. I shall make these two points because we also have the benefit of the Government’s position. It is summed up in one sentence, which is that addressing this issue by combining hours in some way addresses a problem which is a perception rather than a reality. That is not a direct quote, but it is what the Pensions Minister said in the House of Commons. That argument relies on all those elements that my noble friend Lady Hollis articulated. I have a list of them here which is presented in a slightly different way.
At the heart of them, there are two arguments. The first is that this is a temporary phenomenon, often coming at the end of a working life, and as one will get a pension for 35 years’ contributions over a working life of about 50 years, the better option for most people is not to pay national insurance. It was argued that at present many of these people are not paying insurance and would not thank the Government for requiring them to do so because no one volunteers to pay tax. If that is true, it is a powerful argument.
The other argument is that the Government’s estimate is that only in the order of 50,000 people are in this position, that that number has grown only slightly recently and that, in any event, one in five of them may be on national insurance credits as a result of claiming universal credit. If that is true, that is also a powerful argument. It does not undermine all the arguments that my noble friends have made, but it is powerful.
I want to address both arguments. Of course it is difficult to challenge them because the data do not exist, but we all live in this world. My sense is that large numbers of people working two or more low-earning jobs, many of them on zero-hours contracts, is a phenomenon that is growing throughout the country. That is my experience of living in the United Kingdom and of travelling, because of where I live for parts of the week, across two very distinct communities. I see it growing in both communities that I have contact with.
In fact, I believe that this is a strong and growing characteristic of the modern UK labour market. It is at the heart of the flexibility that has allowed the UK labour market to be able to maintain and grow jobs in circumstances where one would intuitively have expected unemployment to have increased significantly more because of recession. It is a part of the flexibility of the labour market that, in a sense, we celebrate, and spent a period trying to get other countries to follow.
My sense is that this is much greater, and I shall share this short anecdote because it is instructive about how it is affecting people in the communities in which we live. On my way home from our debates on Monday, I overheard a conversation among three young people in a very quiet overground train. I sometimes find it difficult to estimate age, but they were all in their mid-20s. They were all coming back from employment with one employer, which was a
mini-job. From their conversation, it was clear that they had, by my reckoning, seven jobs among them at least. Each of them had at least three jobs. Most importantly, they had all had the benefit of a tertiary level education. I could not guarantee that they were all graduates, but at least two of them were, from what they said, and the third also had the benefit of a tertiary level education. These were not your traditional B&Q employees at the end of their life. They were well educated young people coming into a labour market where that was the expectation. That fundamentally challenges the idea that this is a temporary phenomenon and that it can be dismissed, as it has in the past.
1.30 pm
My second point is about the assessment that there are about 50,000 people in that situation. Again, because I do not have the data, I cannot address that directly, but I can by analogy. We await the anticipated BIS consultation on zero-hours contracts. The Minister will recollect that in a debate about zero-hours contracts, it emerged that for the fourth quarter of 2012, the ONS estimated that there were 250,000 people on zero-hours contracts. However, a contemporaneous survey by the CIPD estimated that about 1 million people were on such contracts and, following that, the ONS conceded that the Labour Force Survey, which is based on responses by individuals, more than likely understated the number—to such an extent that the ONS has now announced that it will change the way it collects its data from autumn 2013, reporting in mid-2014,
“so as to obtain more robust data”.
So there is an implication—not an acceptance, but an implication—that the ONS Labour Force Survey may have underestimated the number of people on zero-hours contracts in this country by a factor of 300%. We will see if that is right when the survey is published. Consequently, from my experience and the experiences that have been shared—I am sure that the Minister has also heard about how the labour market is working in the United Kingdom—and from the unreliability of the best official estimates of zero-hours contracts alone, I am moved to ask the Minister just how robust are the figures being used to inform the policy.
I ask the Minister a supplementary question, which he may not be able to answer now. Given the significance of that development, as the Labour Force Survey already canvasses for figures for zero-hours contracts, if it does not canvass information about short-hours contracts, why not? Can the ONS be asked to do so? Does the Minister accept that if the 50,000 figure is wrong and, as my noble friend suggests and as our experience suggests, a much higher and growing number of people are involved, that seriously undermines the stated policy of reducing means-testing? If that is how people will have to live for their full working life, that blows a hole in one of the fundamental objectives of the policy, which we all share. Perhaps we should engage with that at this stage. I do not suggest that any of the answers suggested by my noble friend are easy or that the Government should accept them; I am just saying that engaging with the issue in a more informed way could be fundamental to the success of the policy, with which we all agree.