As Committee members will have noticed, this is a significant group of clauses, which relate to the establishment of a negotiating body for the adult social care sector, a key element of the Government’s plan to make work pay. The body aims to address the long-term issues of low pay and poor retention in the adult social care sector.
The adult social care sector is large, with 1.59 million people working for it in England in 2023-24, which as I have already said is equivalent to 5% of all adults in employment. Poor terms and conditions are associated with higher staff turnover. For example, the Skills for Care annual report states that care workers were less likely to leave their posts if their employers paid above the 3% auto-enrolment rate for pensions, or paid more than statutory sick pay if care workers could not work due to illness. This is a key element of the Bill.
I will speak to each clause in turn. Clause 29 gives the Secretary of State the power to create the adult social care negotiating body by regulations, with the aim of negotiating a fair pay agreement within the adult social care sector. Giving specific powers to the Secretary of State in relation to the body is key to ensuring that the Government have the necessary powers to set up and design this body, and that will take place after engagement with the sector.
The clause ensures that the Secretary of State has the power to create a body that is appropriately made up of members including representatives from relevant trade unions and employers. It also enables regulations to provide for the smooth and efficient running of the body, and for it to be subject to reporting requirements. The Secretary of State will have the power to set out the body’s decision-making process and to make provision for any staff and facilities and for payment of fees and expenses.
Clause 30 defines the matters within the negotiating body’s remit—namely, the remuneration and other terms and conditions of employment of social care workers. The clause enables the body to cover not only pay, but wider terms and conditions of employment of adult social care workers.
We know that the adult social care sector is diverse, so the clause also allows the Secretary of State to add further matters to the remit of the body, provided they relate to a social care worker’s employment. The remit of the body can also be narrowed by the Secretary of State, who has the power to specify in regulations the types of social care worker that fall within the remit of the body.
Members will see that clause 31 defines “social care worker” as including those who work in, or are employed in connection with the provision of, adult social care. The clause specifically excludes from the definition of adult social care anything provided by an establishment or agency regulated by His Majesty’s chief inspector of education, children’s services and skills, to ensure that children’s services are not captured. The clause provides an essential definition of adult social care worker, which the other clauses refer to throughout. Without it, the remit of the body and the scope of the clauses would not be sufficiently defined.
Clause 32 sets out the power of the Secretary of State to make provision in regulations about the consideration by the negotiating body of matters within its remit. In accordance with regulations made under the clause, the Secretary of State will be able to specify conditions that any agreement must meet, such as on funding. It also allows regulations to provide that the body may consider only matters referred to it by the Secretary of State, such as specific terms and conditions for certain types of social care worker, and must take into account specified factors when coming to an agreement.
The regulations that can be made under clause 32 can impose information-sharing duties on the body’s members to enable efficient negotiation and require the body to submit any agreement to the Secretary of State for consideration. They also allow for the body to be allocated clear deadlines for discussion, so as not to delay this important process.
Clause 33 enables regulations to provide that the Secretary of State can refer agreements back to the negotiating body for reconsideration. Making provision for reconsideration of an agreement ensures that any agreement can be refined following review by the Secretary of State and that the Government are not forced to reject an agreement they are unable to implement. It also provides the Secretary of State with an appropriate safeguard to ensure that further work can be done, where necessary, to ensure that a suitable agreement is reached. The Secretary of State can also make regulations that provide for the same matters listed in clause 32.
Clause 34 allows the Secretary of State to make provision in regulations for circumstances where the negotiating body is unable to reach an agreement. Providing a clear process for the body to resolve roadblocks in reaching an agreement is key to ensuring that the body arrives at a conclusion that is agreeable to all parties. In regulations made under this clause, the Secretary of State will have the power to appoint someone to resolve the barriers to an agreement and confer the relevant dispute resolution powers on them.
Clause 35 allows the Secretary of State to ratify an agreement made by the negotiating body and thereby give it legal effect. That is essential to successful implementation and ensures that any agreement provides the maximum protection for affected workers. It allows for sufficient flexibility, because the Secretary of State can ratify part of an agreement, such as implementing some aspects through employment contracts, while leaving others that would be more appropriately implemented through codes of practice.
The regulations may have a retrospective effect, as outlined under clause 41. That is necessary to enable regulations to appropriately fill any gap between, for example, the body reaching an agreement and the subsequent regulations ratifying that agreement, and could be used to backdate a pay rise to the date previously agreed by the body. However, the retrospective effect is limited by appropriate safeguards: regulations cannot make provision that reduces remuneration or alters conditions of employment to a person’s detriment, in respect of a period before the date on which regulations are made.
Clause 36 explains that the effect of ratifying an agreement under clause 35 is to change the employment contracts of adult social care workers included in the scope of the agreement. The ratification regulations can change both the remuneration and the terms and conditions of employment contracts, depending on the content of the fair pay agreement. They also give precedence to the terms in ratified agreements over inconsistent terms in existing employment contracts. For example, if an agreement sets a new minimum hourly rate, that will take precedence over employment contracts that set out a lower rate, and so ensure that the employee enjoys the rate set out in the ratified agreement. The clause is essential to ensuring that any ratified agreement will be on a statutory footing and therefore legally implemented.
Clause 37 gives the Secretary of State the power to make provision in regulations when the body has notified the Secretary of State that it has been unable to reach an agreement. The Secretary of State’s powers under this clause are limited to those matters on which the body has failed to reach an agreement. The powers under the clause are similar to those in clause 35, and enable regulations to override the pay and other terms and conditions set out in social care workers’ contracts.
As under clause 35, the regulations may have a retrospective effect, as outlined under clause 41. That is necessary to enable regulations to appropriately fill any gap between, for example, the body reaching an agreement and the subsequent regulations ratifying that agreement, and could be used to backdate a pay rise to the date previously agreed by the body. However, the retrospective effect is limited by appropriate safeguards: regulations cannot make provision that reduces remuneration or alters conditions of employment to a person’s detriment, in respect of a period before the day on which regulations are made.
Clause 38 gives the Secretary of State the power to make regulations about the creation of guidance or codes of practice in relation to the agreements reached by the body. The clause also enables regulations to impose duties on specific persons in relation to provision in guidance or a code of practice, and makes provision around the consequences of failing to comply with those duties, including increased financial awards in any later court or tribunal proceedings. That will ensure that any pieces of guidance or codes of practice are appropriately followed, with appropriate consequences for parties that fail to comply.
Clause 39 gives the Secretary of State the power to make regulations imposing record-keeping obligations on employers. Similar provisions already exist for enforcing other aspects of employment law, such as the national minimum wage and the working time regulations. The clause therefore gives the power to apply the provisions under the National Minimum Wage Act 1998, to give social care workers a right of access to records. There may be new requirements under a ratified agreement that are not covered by existing record-keeping obligations, and without this clause the employer may not be able to provide evidence to enforcement authorities that the new requirements are being followed. We expect the fair work agency, upon its creation, to take on responsibility for the enforcement of the national minimum wage, including those record-keeping requirements.
Clause 40 will give the Secretary of State the power to make regulations about the enforcement of remuneration terms in ratified fair pay agreements. These regulations can apply enforcement mechanisms used under the National Minimum Wage Act 1998, notably the notices of underpayment regime, and the clause lists specific sections of that Act in relation to enforcement. We do not intend to introduce any criminal sanctions to enforce the fair pay agreement framework. That will ensure that any pay terms can be appropriately enforced by the state, ensuring that employees are effectively paid under the conditions of a ratified agreement. The clause also prevents double recovery of remuneration, ensuring that enforcement cannot take place twice—once for the national minimum wage and again for a ratified fair pay agreement—in respect of the same work.
Clause 41 gives the Secretary of State the power to create regulations under clauses 35 and 37 that have retrospective effect. As we have set out previously, that is to ensure that provision in terms of pay and conditions that falls after an agreement is reached and before the day on which regulations are made can have retrospective effect. That is necessary to enable regulations to appropriately fill any gap between the body reaching agreement and subsequent regulations being passed to ratify that agreement. Subsections (3) and (4) ensure transparency, creating an obligation to publish documents, such as the ratified agreement, that are referred to in the regulations.
Clause 42 makes further provision about the regulations that can be made under the powers in this chapter. These provisions are non-controversial, and they include the option for regulations to confer discretion on a person. That may be needed, for example, to give the chair of the body discretion to deal with a matter during the negotiation process or to give a third party discretion to resolve a dispute in accordance with the regulations under clause 34. Subsections (2) and (3) provide that ratification regulations will be subject to the negative resolution procedure, and any other regulations made under this chapter will be subject to the affirmative resolution procedure. That is because ratification relates to an agreement that has been reached by the negotiating body and assessed by the Secretary of State as being appropriate for ratification, and it would not be necessary to subject the ratification regulations to detailed parliamentary scrutiny.
Clause 43 simply allows regulations to provide that any actions or agreement by the body would not constitute collective bargaining or a collective agreement as defined in the Trade Union and Labour Relations (Consolidation) Act 1992. The Government have taken that approach because these clauses, and the regulations made under them, will create a new, separate legal framework under which fair pay agreements in the adult social care sector will be negotiated. For example, the clauses provide for a fair pay agreement to apply across the entire sector and to be legally binding when it is ratified in regulations.
That goes further than the 1992 Act, which sets different requirements for collective agreements to be legally binding and envisages that collective bargaining will be on a much smaller scale between one or more recognised trade unions and one or more employers or employer associations. The Government’s intention is very much for the negotiating body’s activities to be a form of collective bargaining, as a concept. It is simply that we cannot have two different legal frameworks to the same process.
Clause 44 is uncontroversial. It simply provides definitions for the terms used in this chapter and ensures that the definition of worker’s contract can cover agency workers who might not have a contract with their agent or the person they have been supplied to work for. That ensures that an agreement can be ratified for agency workers who do not have a contract with the agent or principal. The clause clarifies that references to a ratified agreement may also include references to parts of an agreement that have been ratified.
I am confident of the Government’s ability to deliver this flagship policy, supported by the Health Foundation, which indicated the strong case for improving pay and conditions in the social care sector in its written evidence to the Committee. Indeed, the same thing was noted in much of the evidence that we have heard in support of these measures. I commend clauses 29 to 44 to the Committee.