Close to 600,000 workers or 2 per cent of the workforce are employed on a zero-hours contract. Photograph: Getty Images.
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We should reform zero-hours contracts, not ban them

Abuse needs to be addressed, but we must maintain flexibility for employers and workers.

There is still much that we don’t fully know about zero-hours contracts – contracts that do not guarantee any hours of work. Estimates about the number of people working on zero-hours contracts vary significantly and the jury is out as to whether their use is cyclical (driven by years of economic downturn), structural (a permanent feature of the labour market) or both. But there is already enough evidence of misuse to create a strong case for action on certain fronts to improve security for workers, while rejecting an outright ban. Our new report, Zeroing In, puts forward a set of recommendations for the reform of zero-hours contracts, including, but going beyond, a ban on exclusivity clauses already suggested by the government.

The latest estimate from the Office for National Statistics is that close to 600,000 workers or 2 per cent of the workforce are employed on a zero-hours contract. Health and social care, hospitality and administration account for over 50 per cent of these workers. Zero-hours contracts are intended to offer flexibility to employers and workers. Employers can quickly change their staffing levels at no cost and workers can work when they choose, helping to balance family and other commitments. However, in reality, a quarter of those on zero-hours contracts work a fixed pattern of hours each week; a third of employers expect workers to be available for work at all times; and four out of ten zero-hours workers would like to work  more. Flexibility for employers too often comes at the expense of workers.

To address this imbalance, anyone who has been employed on a zero-hours contract for at least a year and works a relatively consistent pattern of hours should have the right to a fixed-hours contract, if they choose. Under these circumstances, zero-hours contracts are not being used to respond to changes in demand. Workers are simply being denied employment rights to which they are entitled, such as Statutory Sick Pay and paternity and maternity leave. Introducing this right after 12 months rather than 12 weeks, as has been suggested, recognises that employers need time to plan how best to use their staff.

We should also extend the right to a set of employment terms to all workers not just employees. This would help to address the fact that anecdotally many people who take up a zero-hours contract do not know they have no guaranteed hours  until their hours are cut and are frequently not aware of their entitlements. In addition, Acas should work with business representatives and unions to set out a good practice guide to increase employer awareness of how to use zero-hours contracts fairly and more funding should be available for enforcement to proactively clamp down on employers who misuse these zero-hours contracts.

This is a deliberately cautious approach, seeking to address abuse, while maintaining flexibility for employers. As the recovery strengthens and the data on zero-hours contracts becomes clearer, we will need to keep the situation under review. If improvements are not forthcoming, a stronger, more statutory approach could be justified.

Vidhya Alakeson is deputy chief executive of the Resolution Foundation

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Why relations between Theresa May and Philip Hammond became tense so quickly

The political imperative of controlling immigration is clashing with the economic imperative of maintaining growth. 

There is no relationship in government more important than that between the prime minister and the chancellor. When Theresa May entered No.10, she chose Philip Hammond, a dependable technocrat and long-standing ally who she had known since Oxford University. 

But relations between the pair have proved far tenser than anticipated. On Wednesday, Hammond suggested that students could be excluded from the net migration target. "We are having conversations within government about the most appropriate way to record and address net migration," he told the Treasury select committee. The Chancellor, in common with many others, has long regarded the inclusion of students as an obstacle to growth. 

The following day Hammond was publicly rebuked by No.10. "Our position on who is included in the figures has not changed, and we are categorically not reviewing whether or not students are included," a spokesman said (as I reported in advance, May believes that the public would see this move as "a fix"). 

This is not the only clash in May's first 100 days. Hammond was aggrieved by the Prime Minister's criticisms of loose monetary policy (which forced No.10 to state that it "respects the independence of the Bank of England") and is resisting tougher controls on foreign takeovers. The Chancellor has also struck a more sceptical tone on the UK's economic prospects. "It is clear to me that the British people did not vote on June 23 to become poorer," he declared in his conference speech, a signal that national prosperity must come before control of immigration. 

May and Hammond's relationship was never going to match the remarkable bond between David Cameron and George Osborne. But should relations worsen it risks becoming closer to that beween Gordon Brown and Alistair Darling. Like Hammond, Darling entered the Treasury as a calm technocrat and an ally of the PM. But the extraordinary circumstances of the financial crisis transformed him into a far more assertive figure.

In times of turmoil, there is an inevitable clash between political and economic priorities. As prime minister, Brown resisted talk of cuts for fear of the electoral consequences. But as chancellor, Darling was more concerned with the bottom line (backing a rise in VAT). By analogy, May is focused on the political imperative of controlling immigration, while Hammond is focused on the economic imperative of maintaining growth. If their relationship is to endure far tougher times they will soon need to find a middle way. 

George Eaton is political editor of the New Statesman.