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The former Hull MP said there had been a "complete disregard" for the conditions of the stewards, who were forced to sleep in the cold under London Bridge in the early hours of Sunday morning during the jubilee celebrations.
The Labour peer warned the incident could set the tone for the treatment of workers during the Olympics. He said Home Secretary Theresa May should look at the conditions of employment by companies like Close Protection UK, who provided stewards during the weekend.
The unpaid labourers were brought in as part of the Government's Work Programme, under which unemployed jobseekers must take up placements in order to continue receiving benefits.