Oral Answers to Questions
Julian Smith Excerpts(11 years, 4 months ago)
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Mr Willetts
Of course, entry to British universities is competitive, and we have many more applicants than places, but we will continue to get across the message that no student has to pay up front to go to university, and that students start paying for university only if they are earning more than £21,000. That is a very fair way of financing our universities.
Julian Smith (Skipton and Ripon) (Con)
What measures is the sizzling science and higher education Minister putting in place to ensure that applicants to universities have the very best information on the outcomes of their courses?
Mr Willetts
For the first time, we have required that key information sets contain the information that prospective students want about, for example, employment outcomes from particular courses at particular universities. People are entitled to that information—it was not available before, but now it is.
Enterprise and Regulatory Reform Bill
Julian Smith Excerpts(11 years, 7 months ago)
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Jo Swinson
I will in due course, but I want to make a bit of progress first.
I welcome this opportunity to set out the changes that we have proposed and respond to those made by others, continuing the work of my predecessor to bring reform to the employment tribunal system. Let me begin by explaining the amendments that we are making through new clause 8, which will amend existing provisions in the Employment Tribunals Act 1996.
Following his fundamental review of the rules of procedure for employment tribunals, Mr Justice Underhill made a number of recommendations about how the rules might be improved. In some instances, he felt that the primary legislation would need to be amended before desirable changes in the procedural rules could be made. These changes will help to achieve more effective and targeted case management which will benefit all tribunal users.
The first change involves deposit orders. Tribunals can currently require a party to pay a deposit of up to £1,000 as a condition of continuing to proceed with a weak claim. However, a judge cannot currently use a deposit order to weed out the weak elements of a particular claim, and must instead attach a deposit order to the entire claim as a condition of proceeding. That lack of flexibility does not aid effective case management. Enabling judges to make better-targeted deposit orders will give both parties a clear sense of where they should focus their efforts, encouraging a more realistic approach to settlement, and I believe that it will also lead to greater use of such orders.
The second change relates to the recoverability of witness expenses for people who choose to represent themselves at tribunals and seek a preparation time order in respect of their work on the case. An oddity in the current costs regime places people who represent themselves at tribunals at a disadvantage, as a tribunal cannot make a costs order for witness expenses and a preparation time order in respect of the same party. We are amending the Employment Tribunals Act 1996 to remove that unnecessary restriction.
The final change deals with the recoverability of lay representatives’ costs. Mr Justice Underhill considered that those who chose to be represented by a non-lawyer, and who had paid for that service and advice, should not be put at a disadvantage when a tribunal concluded that the other party’s conduct meant that a costs order was warranted. I agree that those who choose to engage lay representatives rather than lawyers should not be disadvantaged when it comes to the award of costs, and I intend to use the existing powers in section 13 of the Employment Tribunals Act to change the rules of procedure in order to allow for such costs orders. The new clause helps to clarify the scope of section 13 by introducing a definition of the word “representative”.
Let me now deal with new clauses 1 and 2, tabled by the hon. Member for North Ayrshire and Arran (Katy Clark), which amend clause 15. Along with the organisation Public Concern at Work, she has been a powerful advocate on this subject, and we discussed it recently during a Westminster Hall debate that she had initiated.
I think we can all agree that, in an ideal world, legislation for whistleblowing would not be needed at all. In such a world, all employers would be open and receptive when an issue was raised, and would not seek to silence or drive out a person who brought important matters to their attention. However, as we know, such enlightened approaches to whistleblowing are not universal, so legal protection is required. We are equally keen to ensure that the protection offered by the public interest disclosure legislation is not abused by those who seek to rely on it for purely self-interested reasons. Clause 15, which has already been debated in Committee, will ensure that the whistleblowing provisions cannot be used to advance purely personal interests.
New clause 1 addresses a different aspect of the public interest disclosure legislation. It proposes the removal of the good faith test, which has been in place since the legislation was introduced. That would mean that individual whistleblowers would retain the benefit of employment protection even if their reasons for blowing the whistle were malicious, if they deliberately set out to cause commercial damage, or if they acted out of a desire for personal revenge.
There is clearly a balance to be struck. We are conscious of the recommendations of Dame Janet Smith’s inquiry into the tragic circumstances of the Shipman case. She suggested that the good faith test be removed to encourage more whistleblowers to come forward. We also recognise that the motivations of whistleblowers are not always clear-cut. Personal feelings, particularly when a relationship has broken down, sometimes make it difficult to understand the intentions of the person who is making a disclosure. Having said that, I should add that, as we have already made clear, we believe that the legislation is working well overall, and that the good faith test serves an important purpose.
We are also keen to avoid making a change that could allow individuals access to an uncapped award when their motives for blowing the whistle were malicious, and I therefore do not believe that there is a clear-cut case for removing the good faith test. However, I recognise that the hon. Lady has raised an important issue relating to this specific element of the public interest disclosure regime, and we will continue to look closely at the policy aims of the test to ensure that they are still being achieved.
Julian Smith (Skipton and Ripon) (Con)
Does the Minister agree that there is much more scope for whistleblowing in this country, given the number of whistleblowers in America and the incentives that they are given to come forward? Does she agree that there may be more work for the Government to do in future months?
Jo Swinson
I thank my hon. Friend for his intervention. It is a positive thing that we have an environment where people, rightly, feel able to come forward and blow the whistle. The legislation that was enacted was important and is generally working well. We are proposing small changes to it in this Bill, but it is absolutely important. For the reasons that I outlined, that legal protection is necessary and we should be proud of the fact that we have such legislation.
Julian Smith
I am heartened by these amendments, because one of my concerns in Committee was that this process with ACAS could become far too formal. It is really important that as this early conciliation develops we make it as informal as possible.
Jo Swinson
I thank my hon. Friend for that intervention. He rightly says that we want that process to be a success, and enabling the technology of the telephone to be used in it is a helpful, albeit minor, amendment.
Opposition Members have tabled a number of amendments on the early conciliation process. Amendment 80 seeks to require the Secretary of State to consult on, and undertake an assessment of, the impact of the introduction of fee charging in employment tribunals on the effectiveness of early conciliation before commencing these provisions. Hon. Members will know that the power to charge fees in tribunals is one that already existed; we announced our intention to introduce fees in employment tribunals in January 2011, and subsequently consulted on the appropriate charging points and fee levels in December 2011.
We recognise that the introduction of fees to bring an employment tribunal claim may affect the behaviours of both claimants and respondents, and that there may therefore be an impact on how parties elect to engage with early conciliation. We considered the possible impact as part of the assessment that accompanied the announcement in November 2011 of our intention to introduce early conciliation—copies are in the Library of the House. As part of the implementation planning, we will publish further impact assessments. The proposed amendment would simply require us to replicate work that we have already done and will continue to do, so I am unable to support it. The amendment is unnecessary, but I can give the assurance that we are, of course, continuing to take into account the impact that our approach will have.
Julian Smith
I am heartened that the Minister is not seeking to make any changes to the clause. Is she surprised that the Opposition are so unenthusiastic about helping the 4.5 million small businesses that will benefit from the clause?
Jo Swinson
It is intriguing, given the experience of Opposition Front Benchers as employment lawyers. It is worth bearing in mind that compromise agreements already exist and existed for 13 years under the previous Government. They have a lot of merit, but tend to be used by large firms in particular—large firms, which can afford to employ expensive employment lawyers. Small and medium-sized companies often feel very afraid of taking on such conversations and that is what we are seeking to address.
I recognise that there are concerns about how the clause might work in practice and what safeguards there may be for individuals, many of which my colleague, my hon. Friend the Member for North Norfolk, addressed in some detail in Committee. I strongly believe that in clause 12 we have found the right balance between protecting individuals and giving employers the flexibility and confidence they need to manage their businesses effectively. It is about balance. The settlement agreements measure provides a mutually beneficial solution for employers and employees as regards ending the employment relationship. Let us be clear that this is not, as some have suggested—and as Opposition Members have been suggesting from a sedentary position—the first step to no-fault dismissal or Beecroft-lite. We have made it abundantly clear that we will not go down that path.
Julian Smith
We are hearing a load of bluster and rubbish from Opposition Members. This is a balanced measure that puts a bit more power in the hands of those who will create new jobs in this country. The shadow Minister was an employment lawyer; every member of the Opposition Front-Bench team was a business owner. They are being hypocrites about the clause.
Mr Speaker
Order. The hon. Gentleman must withdraw his use of the word “hypocrites” in relation to Members of the House. Perhaps he will be good enough to withdraw the remark and apologise.
Ian Murray
I congratulate the hon. Member for Broxbourne (Mr Walker) on his election to the Procedure Committee.
Let me, too, start with an affair of state by saying happy birthday to the shadow Secretary of State for Business, Innovation and Skills, my hon. Friend the Member for Streatham (Mr Umunna). I will not lead the House in a chorus of “Happy Birthday”, but we wish him many happy returns.
While I warmly welcome the new Minister to her place, I have to say, with a tinge of disappointment, that I will miss her predecessor, the hon. Member for North Norfolk (Norman Lamb), for two reasons. First, we incessantly used his book, “How to maximise compensation at an employment tribunal”, in Committee. [Interruption.] For the information of the hon. Member for Skipton and Ripon (Julian Smith), the then Minister was formerly an employment lawyer. Secondly, at the end of Committee proceedings we bought him a small gift, “Fifty Shades of Grey”, relating to his other passion in life, and I was looking forward to questioning him on that. I hope that the hon. Lady has read the book, because then some of the references in my speech might make more sense.
It is an indictment of how uncomfortable the Minister is with this part of the Bill that the Government have restricted the time available on Report to deal with the complicated issues within it. Let me be clear from the outset. It does not matter how much the Secretary of State stamps his feet or the Liberal Democrat Minister denies it, this Bill is delivering Beecroft by the back door. It is not just Labour Members who are saying that. I am delighted that the hon. Member for Skipton and Ripon is in his place, because he said the same in Committee, much to the disdain of the former Minister. As is consistent with most of the clauses in this hotch-potch of an enterprise Bill, these changes to rights at work are not about enterprise and are not a panacea for a Government with no strategy for growth.
I cannot emphasise enough that the hard-fought-for rights of employees up and down this country are not the reason we are in a double-dip recession; the failed economic policies of this Government are the reason.
Ian Murray
Let me make some progress, and then I will give way.
To start with the positives, I welcome new clause 8, which is derived from the report by Mr Justice Underhill and his esteemed team. We have always recognised the need to review the procedures of the employment tribunal system to make it work better for employees and employers, but with these proposals we have particular concerns about the increased use of deposit orders. We support the premise of deposit orders in deterring claims which may be unmeritorious, but we fear that their increased use, combined with the introduction of the fees regime, may restrict access to justice. This has the potential not only to restrict justice but to do so for the most vulnerable employees in the employment tribunal system. Will the Minister assess the impact of the changes on deposit orders? I appreciate her giving the commitment that if there were an impact she would return to the issue, but it is strange that these proposals have been introduced. Several of my hon. Friends have been asking about the evidence for doing so. Despite repeated pleas in Committee to produce a proper impact assessment on the insertion of fees into the process, that has not happened.
I welcome the provisions to allow for costs for lay representatives. We agree with Mr Justice Underhill when he said:
“We can see no reason why the claimant should not be able to recover those charges when he would have been able to if he had instructed a legal representative.”
We will not oppose these changes in new clause 8, as they have been properly evidenced, but I could not say that about the rest of part 2, where the Government have absolutely no evidence for any of their proposed changes. Indeed, their own impact assessments, and business surveys, show that there is little appetite for them in the business community. Businesses tell me and other Members that their main concerns are not employee regulations but lack of finance and the general state of the economy.
The reality is that the previous Labour Government created nearly 2 million jobs and 1 million businesses within the current system of employment rights. Mr Beecroft himself agreed, in effect, when he said in Committee that he had no empirical evidence but was basing these recommendations on experience and from talking to people in the pub. In Committee, we had a perfect 10 from Government Members in terms of anecdotes. I am sure that at one point we even heard a direct quote from the managing director of “Anecdotes R Us”. The evidence, particularly from the OECD, shows that the United Kingdom has the third most liberal employment rights regime in the western world.
Ian Murray
My hon. Friend asks an exceptionally good question. I think that it would amount to a voluntary leaving of work, because the employee will not have been sacked—they will have come to an agreement with their employer that they will leave. They will not have been made redundant. I hope that the Minister will address that issue, because it could have significant consequences.
Julian Smith
It is incredible that the hon. Gentleman is unable to understand the frustration of many businesses on the issue of coming to the end of an employment relationship. Does he not understand how frustrating it is for many entrepreneurs throughout the country to finish a relationship with an employee that is not working out?
Ian Murray
The hon. Gentleman makes a tremendous intervention, because he is actually arguing our point: the proposals are bad for business. We would accept the Underhill review’s proposal to make the employment tribunal better and we would accept, with minor amendments, the ACAS proposal for early conciliation, but to put in place a compensated, no-fault-dismissal-cum-protected-conversation system would be bad for business. The hon. Gentleman must also realise that the Business Department’s own small business survey showed that only 6% of businesses listed regulation as a concern. That included all regulation, so employment regulation was only a minor part of it. He can shake his head, but that is what BIS’s own impact assessment says.
Ian Murray
My hon. Friend makes a fantastic point. I do not have the answer, because the Government have not told us, but it seems that if an insurance company can do anything to get out of paying a particular insurance policy, it will do so. Perhaps the Minister will address that.
Citizens Advice has said clearly—I think it has sent this briefing to all Members—that
“this looks less like an attempt to encourage more use of compromise agreements, than a further erosion of the legal protection against unfair dismissal.”
The Minister has been challenged to say exactly what the settlement agreement represents and to come clean. If she did so, this would be a far easier debate to deal with.
The current system allows for the use of compromise agreements when there is a dispute. The new settlement agreements can be used at any time, but it is clear that they are likely to create a dispute. The reality is that the mere fact of instigating discussions without prior process is likely to cause the end of the employment relationship, which is exactly what the employer will want. It is the equivalent of one party in a personal relationship saying to the other party, completely out of the blue, “I don’t love you anymore.” Who would hang around after that? [Interruption.] My hon. Friend the Member for Hartlepool (Mr Wright) suggests that I am speaking from personal experience, but I could not possibly comment. We propose to delete the Beecroft clause, because it is bad for business and equally bad for employees.
Julian Smith
Will the hon. Gentleman confirm that Labour does not believe that regulation is a big issue for business?
Ian Murray
The hon. Gentleman spent a lot of time in Committee posing such questions, but the Federation of Small Businesses, the Engineering Employers Federation, Citizens Advice and many of the top groups that deal with employers and employees tell us that a compensated, no-fault dismissal is bad for business, and BIS’s own impact assessment says exactly the same. Until the Government can produce empirical evidence that underpins some of the Beecroft reforms, I am unwilling to believe what the hon. Gentleman says.
I hope that the Minister has listened to my comments on amendment 81 and I will test the opinion of the House on it at the appropriate time.
Amendment 82 would remove clause 13 and its provision on compensatory awards. The clause gives the Secretary of State the power to alter the amount of compensation paid to an employee who is found by a judge to have been unfairly dismissed. Every Government member of the Committee indicated that they want the amount to be drastically reduced, despite the fact that the Bill gives the Secretary of State the potential to increase it from its current level of £72,000. The Secretary of State has indicated that his cap would be a maximum of either an annual salary or median earnings, whichever is the lower, potentially limiting all claims to about £26,000, the effect of which would be to hit anyone who earns more than average earnings. This Government have hit middle earners time and again and these proposals have the potential to hit them hardest when they will have actually won a claim at an employment tribunal. It should be up to the employment tribunal judge to decide what an adequate compensatory award is, not the Secretary of State.
I will give the House an anonymised example. A claimant was dismissed at the age of 58. He was earning as little as £26,020 net per year, but owing to dismissal will not attain that level of earnings before he retires at 65. After eight months of unemployment, the claimant got a job on £20,020 net per year. His loss was calculated by a judge at an employment tribunal to be £124,200. Under the current regime, he would receive 62% of that claim. Under the Secretary of State’s regime, he would receive less than 20% of it. That is somebody on fairly average earnings of about £26,000 a year. Citizens Advice has stated:
“The idea that this could have a measurable effect on the behaviour of workers and employers is not credible”.
It proposes the deletion of clause 13 on that basis. That is why I would like to test the opinion of the House later this afternoon.
The critical point is that the combined impact of settlement agreements, ACAS early conciliation, fees and the lowering of the cap on compensatory awards will deliver the very compensated no-fault dismissal that was in the Beecroft report. Let me demonstrate why. If an employer decides that he no longer likes an employee, he might offer them a sum of money to leave his employment in a settlement agreement. The employer could say that the amount offered will be reduced each day that the settlement agreement is not accepted. The employee will feel pressured into accepting an offer for fear of victimisation, for fear that the offer will be withdrawn or reduced over time, or because of the spectre of having to take an unfair dismissal claim with the associated fee structure. Even if the employee were to win the tribunal case, the compensation cap proposed by the Secretary of State would be considerably lower than the losses that they had encountered.
This is a rogues charter that will result in poorly compensated employees who feel that the system is too complicated and expensive to make a rightful claim for justice. This is compensated no-fault dismissal in action. Let us not mention the ludicrous announcement by the Chancellor at the Conservative party conference that people could give up their workplace rights for a few company shares.
I will quickly run through amendments 92 and 83. In Committee, we pressed the then Minister, the hon. Member for North Norfolk, to introduce a better system for the enforcement of employment tribunal awards. He committed to look at that, but nothing has come forward. As the Minister has said today, some 40% of people who have been found by a judge at an employment tribunal to have been unfairly dismissed never receive their award. I am glad that the Minister is as shocked as we are by those figures and is looking at the matter. I will support her if there is a genuine attempt to make the system better.
Amendment 92 would essentially add to the powers of the employment tribunal to impose a penalty on an employer who does not settle the award within the time specified by the judge. It seems strange that the Government are proposing to fine an employer for aggravated circumstances in order to boost the coffers of the Treasury, while the employee has to wait or gets nothing at all. I am sure that many Members have constituents who have not been paid their compensatory awards.
Amendment 83 would merely remove the provision that introduces a parking ticket-style discount to employers if they pay their fine to the Treasury within the set period of time. That could have the unintended consequence of the penalty being prioritised over the awards due to the employee.
I will move on to amendment 94 and the new clauses tabled by my hon. Friend the Member for North Ayrshire and Arran (Katy Clark). Amendment 94 relates to clause 15, in which the Government attempt to limit the definition of a protected disclosure, which is the basis of whistleblowing claims. Whistleblowing is a day-one right that has the potential for unlimited compensation. The Opposition agree with the Government that this should not be used for an individual’s own employment contract, but we disagree that inserting a public interest test into the legislation will assist in the matter.
The Law Society agrees with us. It has said that the provision should state that a breach of a legal obligation requires something more than a breach of the individual contract of employment, so as to satisfy the public interest test. At present, the provision means that allegations about matters other than a simple breach of a legal obligation must fall within a test of public interest. A disclosure that a criminal offence has been committed would therefore also have to satisfy the public interest test.
We propose that the legislation be altered to omit an individual’s employment contract from whistleblowing claims, unless it satisfies the public interest test. One reason why the Government have got it wrong on this matter is that there has been no consultation with the relevant parties and stakeholders on how best to achieve the goals that we want to achieve.
Richard Fuller
I will speak in favour of the two amendments relating to clause 14 that stand in my name. We have heard many legal arguments today. I am not a lawyer by training, so I have listened as intently as I can. My background is in business, and I draw the House’s attention to my continuing interests.
The Minister did an excellent job of portraying the middle path that she is taking with the legislation. I intervened on her to say that many business people feel that Parliament and politicians are out of touch with the realities of their day-to-day business. In some cases, their voice is not heard loudly enough. My amendments deal with one area where there is further that the Minister could go.
Julian Smith
My hon. Friend says that the public feel that this place is sometimes out of touch. From what he has heard from Opposition Members, would he say that Labour is anti-business and completely out of touch with entrepreneurs?
Richard Fuller
My hon. Friend makes an excellent point. All of us are aware that the Labour party has trouble understanding aspiration and even more trouble in rewarding aspiration. I am sure that Opposition Members will reflect deeply on the point that he has made.
Richard Fuller
I appreciate the hon. Gentleman’s perspective, but the Minister made quite clear her belief that there is sufficient evidence and support for the Government’s measures. Many of us think that they will go quite some way towards providing what businesses and employees would see as a reasonable and fair way to make efficient changes in the procedures for dismissal, dealing with unfair dismissal and tribunals.
I wish to focus on clause 14 and my amendments to it. Amendment 58 would delete the clause entirely, and amendment 59 would apply its principles only to businesses outside the micro-business sector—those that have more than 10 employees. The shadow Minister, the hon. Member for Edinburgh South, has given a number of the justifications for doing that both in Committee and today. First, there is the principle that involving the Government in a dispute between an employer and an employee may complicate the achievement of a settlement between those two parties. It is difficult to understand the a priori reason why a Government should try to achieve a take, because as he made clear, we should be trying to ensure that employers pay the amount for which they are responsible to an employee who has been aggrieved by a dismissal. I listened to the Minister’s comments, but my concern is that the clause will provide additional complexity in the process.
As the Minister indicated, the clause will also create an imbalance between the employee and the employer, and we are not sure how that will play out under the new regime. I hope that if the Minister will not accept my amendments today, she will at least agree to examine how the changes play out, and perhaps consider whether the issue of financial penalties should be reviewed in future.
Julian Smith
It is worth recording that every business representative group in Britain is concerned about the clause, for many of the reasons that my hon. Friend has given.
Katy Clark (North Ayrshire and Arran) (Lab)
I will speak to new clauses 1 and 2, which relate to different aspects of whistleblowing. The current provisions on whistleblowing are in the Public Interest Disclosure Act 1998, a landmark piece of legislation introduced by the previous Labour Government. That legislation was fought for by many people over many years, and came about as a result of decades of campaigning by many across the political divide. I am therefore pleased to see that the hon. Member for Aldridge-Brownhills (Mr Shepherd) is listening to the debate, as he was one of those who campaigned on this matter during the previous Conservative Government.
Clause 15 introduces a public interest test into the whistleblowing legislation, and future claims will be successful only if the worker believed that the disclosure was made in the public interest and—in the case of wider disclosures—can demonstrate that that belief was reasonable under the circumstances. The clause will make it more difficult for people to rely on the 1998 Act, as it creates yet another legal test in what is already a complex legal area, and means that those who may be considering whistleblowing will face yet another hurdle to obtain the protection of the legislation. New clause 1 would remove one of the other legal tests—the good faith test—from the legislation.
There is no doubt that lives have been saved as a result of public interest disclosure legislation. However, as the Minister indicated, Dame Janet Smith stated in the Shipman inquiry that the good faith test was a barrier to whistleblowers, and that is borne out in reports from the ongoing Mid Staffordshire and Leveson inquiries. Given that another test is being added for a protected disclosure to be met, we must consider whether the proposed legislation will make it more difficult for someone to get the protection of the law.
I believe that Parliament and politicians should want individuals to whistleblow when that is in the public interest. Indeed, at almost any point in history, there have been situations in which it was—and should have been—appropriate for an individual to bring information to the attention of the relevant authorities or, where appropriate, the public, irrespective of whether they could prove that they were acting in good faith.
Julian Smith
I pay tribute to the work done by the hon. Lady on this important issue. Does she think that the time has come to consider the American model in which society starts to give incentives to whistleblowers, and will she comment on that?
Katy Clark
I would not necessarily say there should be incentives, but people should not be punished for whistleblowing. It is currently very difficult to get the protection of the law, and we need to look at that. That is why I, together with others, have called on the Government to look at the entire area. It is now more than a decade since the 1998 Act was introduced, and we need a thorough review and full public consultation on all issues associated with whistleblowing.
Current topical examples of where I believe it should not be necessary for someone to show that they are acting in good faith include the allegations that are coming to light about Jimmy Savile, and the cover-up that we have seen over many years following the Hillsborough disaster. There will be many other examples central to the political debate where politicians would welcome whistleblowers taking action.
John McDonnell
We have extremely limited time to debate this group of proposals if we are to debate the green investment bank. I absolutely abhor the programme motion, and the Minister took up nearly a third of the time for debate. Report is the only stage at which someone not on the Committee can table and debate amendments, and I have only around five minutes to speak to mine.
We naively debate the detail of legislation and Bills without understanding their political context. The political context of the Bill is the statements made at the Conservative party conference. This is the first stage in a legislative process under this Government of giving employers the licence to sack at will. That is what this legislation is about.
When the Minister spoke, it was like having a delegate from the Institute of Directors in the Chamber. The measure is like the first stage of the IOD programme for reforming employment law.
John McDonnell
No, I will not, because we do not have time and, to be honest, the hon. Gentleman is becoming monotonously boring.
When the Prime Minister spoke at the Conservative party conference, he said that he was on the side of the strivers. He makes it clear in the Bill that he is on the side of employers who want to sack people—without adequate compensation or adequate protection in law.
I have tabled a number of simple, basic amendments to ameliorate the proposed legislation, all of which have been rejected. I suggested that there should be a sanction against employers who do not participate in conciliation. We are told that such a sanction already exists, so my proposal would simply codify what the Minister has said happens in practice. It is important that we include that in the Bill.
I have made a simple attempt to amend the time scales in which claimants can prepare their case. A month is not enough for them—they must collect information and seek legal advice, and individuals often draft legal papers themselves. A six-month time scale would reflect that reality.
Another proposal would ensure that the processes being introduced by the Government have the confidence of all sides. It is unacceptable for the judge to determine who is on the Employment Appeal Tribunal, because it removes the experience of both sides of industry, who could advise the judge. My proposal is simply that consensus should be achieved and that the decision should be made with the approval of both the employee and employer representatives—all parties concerned. Even that proposal has been rejected.
People are not currently adequately compensated, which is why the cap is unacceptable. In no other area of law does a judge make an assessment that someone has lost and determine compensation, only for a cap to prevent full compensation. That is why there should be no cap, and yet the Government are keen on caps—they have introduced a £5,000 cap on fines against employers. What is £5,000 to companies such as Virgin or Starbucks, which we heard about yesterday? They are billion-pound companies. What is a £5,000 fine to them? It is meaningless.
Julian Smith
I support the Bill, which backs risk-takers across Britain—the 4 million businesses with fewer than 10 employees, accounting for 7 million jobs. Most of these businesses are run by people earning less than the average wage.
Despite what Labour says about regulation, it is causing those business owners and entrepreneurs a problem. To continue to get job results like today’s, we have to do more to give those owners confidence to take on more staff. The Bill’s measures—tribunal fees, reducing compensation for unfair dismissal, settlement agreements and the slight rebalancing from employee to employer—will give many entrepreneurs the power and the confidence to take on new staff. The Bill also has measures that will be difficult and challenging for business, such as equal pay orders and board votes, which demonstrates that this Government will not accept bad business behaviour.
Under Labour, business in Britain was being hit by six new regulations every day. There was a relentless focus on job protection rather than job creation; poor oversight of the pay of business boards; and appalling comparative performance on board diversity and on equal pay issues. This Government back the risk-takers, are on the side of the entrepreneur while protecting rights, and are challenging the worst excesses of business that went unchecked for 13 years. Labour is for excessive job protection; we are for job creation. I pay tribute to the excellent two new Ministers and I am sure that their work will ensure that our job figures continue to get better for months and years to come.
Enterprise and Regulatory Reform Bill
Julian Smith Excerpts(11 years, 7 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Matthew Hancock
My hon. Friend anticipates my speech, because this provision will reduce the burdens on business. It is difficult to know precisely by how much because businesses react not only to the letter of the law, but to the perception of the law. There are perceived health and safety requirements that go beyond technical breaches of the law, and we want to remove them. One can go to the new Government website and ask whether something is required by health and safety legislation. Many of the cases that are brought to the Government’s attention are not required by health and safety legislation. The problem is the perception of health and safety legislation. By including a reasonableness defence, we will help to remove the implied, expected and perceived burdens on business.
Julian Smith (Skipton and Ripon) (Con)
When my hon. Friend became a Minister, what assessment did he make of the previous Labour Government’s attempts to lift the burdens on business and the perception of those burdens over the 13 years that they were in office?
Matthew Hancock
I have found no evidence of that. If my hon. Friend can point any out to me, I would be extremely grateful.
Julian Smith
I reciprocate the hon. Gentleman’s remarks. Does he agree with the Government that perception is important in health and safety legislation in almost the same way as in employment law? Does he claim that there is no issue with perception, and does he totally disagree with what the Government are trying to do?
Mr Wright
On perception, there is a feeling in the country—it is often fuelled by the media—that the so-called health and safety culture is inevitably a drag on economic growth and recovery. We must, however, set the context, and I want to make an important point to the Minister. The TUC estimates that every year at least 20,000 people die prematurely as a result of injuries, illnesses, or accidents caused by or in their place of work. That is far too many. The shocking figure from the Health and Safety Executive of 173 workers who were fatally injured at work often excludes a large number of other work-related deaths, but that figure alone means that 173 people went to work and did not come back, and that should not happen in a modern, compassionate society.
Mr Wright
If the hon. Gentleman will allow me, I will move on.
There are benefits to business from an effective and proportionate health and safety regime. As I mentioned, a safe and healthy work force can be a productive and effective work force. The Institution of Occupational Safety and Health estimates that, by having an effective health and safety regime, employers could save up to £7.8 billion, individuals could save up to £5.12 billion, and the economy, each and every year, could save up to £22.2 billion. It is important that health and safety is classed not as unnecessary and bureaucratic, but as conducive to good, effective and sustainable economic growth.
It is with those figures in mind that we should consider the merits of health and safety regulations and legislation, and the long-established premise of strict liability. As we know and as the Minister said, Professor Löfstedt reported in November last year. My right hon. Friend the Member for East Ham (Stephen Timms), who speaks for the Opposition on health and safety, welcomed many aspects of Löfstedt’s review. As my right hon. Friend said, most of it was positive, sensible and evidence-based, which is not a phrase we have heard often in deliberations on the Bill, and reinforced the view that health and safety is not a burden.
Over a number of years, the Health and Safety Executive has undertaken simplification exercises, which had support from both trade unions and employers. There are 46% fewer regulations than 35 years ago, and there has been a 57% reduction in the number of forms used. There is a perception that firms, and particularly small firms, spend disproportionate time on health and safety to the detriment of business and growth, but the average business spends 20 hours and just over £350 a year on health and safety risk management and assessment, according to the Minister’s Department. Such activities therefore do not exactly take up a huge amount of businesses’ time.
Julian Smith
The shadow Minister might be about to say this, but does what he just said mean he will get on the side of the small business in Britain, as the Government are doing, and vote with them on new clause 14, or will he oppose it?
Mr Wright
The Labour party has always been on the side of small businesses, and Labour Members will continue to be so. In the 13 years of Labour government from 1997 to 2010, 1.2 million businesses were created, whereas 50 businesses each and every day are folding as a result of the current Government’s macro-economic polices and the double-dip recession. I shall therefore take no lessons from the hon. Gentleman.
Professor Löfstedt suggested that the UK needs a greater understanding of risk. We need to reject tabloid claims and the perception at the centre of the debate so far that health and safety legislation has somehow gone too far. He also recommends that education is provided to employers, workers and students on the dangers they face. However, the short section on strict liability in Professor Löfstedt’s report offers no argument or evidence for changing the current legislative arrangements, but rather an assumption that strict liability is unfair on employers. In fact, Löfstedt refers to three cases, but two were not strict liability cases, so would not be affected by the new clause. The assumption that the Government are guilty of making—they have been guilty of making many such assumptions on employment rights—is that the removal of that type of liability in some cases will boost the economy. That is economically illiterate, however, and not the solution that businesses, including small businesses, want to get us out of the double-dip recession that has been made in Downing street.
I mentioned the accusation of there being no evidence—we have heard that phrase time and again during the consideration of the Bill. There has been no consultation on the measure, which means that there could well be unintended consequences, because the Government have not sought the expertise of those who deal intimately with such issues. There has been no impact assessment on the measure, but can the Minister say why not? What are the expected costs and benefits of implementing the measure, which is supposed to liberate businesses to concentrate on economic growth? Does he have tangible, quantifiable, empirical evidence to support such claims?
Health and safety regulation has always contained a balance between different types of obligation—the majority are qualified by the phrase “reasonable practicability”, but some are strict. Although Professor Löfstedt had the insight that “reasonable practicability” has underpinned health and safety regulation, it has never been the key concept. A central point of the Opposition’s argument is that the balance has existed since the Factories Act 1937, which has been mentioned. In that three quarters of a century, the balance has been generally considered fair. Removing it risks taking us back to a 19th-century mill owner’s view of health and safety, which the Opposition could never support.
If someone is injured because of a defect in a piece of equipment provided by their employer, the law is that it is no defence for the employer to say that they had a proper system of maintenance and inspection. Most people would think that right and fair, so it is unfortunate that the Government do not. They believe it is unfair for an employer to be the subject of civil action and pay compensation when they are not at fault, but what about fairness and justice for the injured worker? They are not at fault and did not ask to be injured. The new clause would remove the right to compensation for workers in those circumstances unless they can prove fault. The Government seek to place the burden on vulnerable employees, but the employer, and not the employee, selects and provides the work equipment. Regardless of fault, it is therefore the employer and not the employee who creates the risk. That is important.
Mr Umunna
My hon. Friend hits the nail on the head and identifies the Government’s real motivation. We are in the third quarter of a contraction, which we will hopefully come out of in the next quarter. We were promised many things in relation to the economy that have not turned out to be the case. In their desperation to get the economy moving, and with their complete refusal to stimulate the economy, the Government are now doing the traditional thing and looking to water down people’s rights at work as a substitute for a proper growth plan.
New clause 13 would abolish discrimination questionnaires, which employees can submit to their employers to obtain further information and make up their minds about whether to institute proceedings, or maybe to assist them in reaching a settlement with their employer. I know those questionnaires well, because I was professionally involved in drafting them on behalf of employees. I was also involved in drafting the responses on behalf of employers.
From the employees’ point of view, there is no doubt that those questionnaires help them access evidence at an early stage, which is incredibly important so that, as I said, they can determine whether to litigate or precipitate a settlement. They will now be all the more important because of the large fees that the Government are levying on people who wish to institute claims in an employment tribunal.
Turning to the employers’ point of view, the Government’s own Equalities Office carried out research on the questionnaires and found that only 2% of private sector employers had had to complete one in the past three years, and that most of those who had done so agreed that responding to them had been straightforward. We do not need to abolish the questionnaires, and I do not accept the reasons for doing so that have been put forward by the Minister. I say that not only from a political point of view but in the light of my professional experience of working for a number of years on these matters.
Mr Umunna
I want to make some progress; I have given way a few times now.
I welcome the addition of new clause 17 to the Bill. It will enable tribunals to recommend that an employer who loses an equal pay or sex discrimination case be required to carry out an equal pay audit. I simply want to raise one question about the scope of the measure. Is my understanding correct that it will apply to private sector employers only? Perhaps the Minister will expand on that point.
Julian Smith
I am listening carefully to what the hon. Gentleman is saying. Does he agree that John Wadham, the director of the EHRC, specifically said during an evidence session in Committee that he and the organisation did not have any problems with the Government’s Bill?
John McDonnell
I agree. I think that what John Wadham and others in the organisation have said is that they will do their best and will live with what legislation there is, but I also think that when they gave evidence to the Committee, their intention was not to support the Bill. It is for us to decide.
Julian Smith
Either the hon. Gentleman is calling me a liar, or he has not read Hansard. The written record of the evidence sessions shows that John Wadham said that the organisation did not have a problem with the Bill.
Madam Deputy Speaker (Dawn Primarolo)
Order. Had the hon. Member for Hayes and Harlington (John McDonnell) referred to the hon. Member for Skipton and Ripon (Julian Smith) as a liar, I should have picked him up on it, but he did not.
Madam Deputy Speaker
No, he did not imply it. He did not raise the issue of the hon. Gentleman’s integrity in any way. There seems to be a dispute about what was actually said, and I think that that is different.
Kate Green
It is absolutely right that we need a strong institutional infrastructure to promote and encourage greater equality, respect for human rights and good relations between different sectors in society, particularly as regards the interests of marginalised and more vulnerable groups.
Julian Smith
Does the hon. Lady not welcome the equal pay audits in the Bill, the Government’s same-sex marriage proposals, and the many equality proposals that they are taking forward? Are those proposals not more important than this body, which has, in a number of reviews, been given quite a lot of criticism?
Kate Green
The hon. Gentleman confuses the operation of the body with its remit. We are not saying that nothing can be done to improve the operation of the EHRC, but that is a different matter from its remit and the context that the Bill is important in setting. While the Government have made one or two grudging steps forward in relation to improving equalities, the proposal on equal pay audits is a watering down of our commitment to have such audits across the board for larger businesses, not only when they have been unsuccessful at tribunal, and the proposals on equal marriage now appear to have been kicked into the long grass. I am glad to see the Minister shaking her head and look forward to the legislation coming forward very shortly. Yet again, the Government have chosen not to go as far as Labour Members were calling for, by wanting to limit equal marriage to civil marriage. There seems to be no good reason not to take that further and for religious institutions that would like to offer a religious ceremony to be able to do so. The hon. Gentleman picked on one or two instances of progress set against a backdrop of failure to take the most progressive action, and in many instances an unwinding of progress on progressive action. It is unlikely that this Government can claim to have done much strenuously to promote equality—in reality, the opposite is the case.
Kate Green
It is shocking that the Secretary of State regards this simply as legislative tidying up, because it goes to the heart of our vision for equality and human rights. I am also concerned that it has been suggested—indeed, the Minister alluded remarks—that other bits of the legislation are going to be good enough and we are not going to lose anything really. For example, the Government have mentioned the possibility of relying on the public sector equality duty, but that, too, is being reviewed by this Government.
What we have had with the red tape challenge, with this Bill and now with the consultation on the public sector equality duty is the piecemeal dismantling of our equalities infrastructure. It is utterly disgraceful that the Government have set about it in this way. They have made proposals today on the statutory questionnaire and on third-party harassment. The consultation on those has just closed and there has been no formal response from the Government; we have simply seen proposals brought forward in this legislation. The Secretary of State assured me personally on Second Reading that he had no plans to bring forward such measures, yet here they are today appearing in the Bill so I am very concerned that the Minister’s assurances that the equalities context is safe in the Government’s hands and that other aspects of legislation will continue to protect it are simply not worth the paper they are written on, given the Government’s track record on this matter over the past few months.
I now wish to examine the good relations duty, a really important duty that has been in place since the time of the Commission for Racial Equality and some of the shocking racial discrimination that we saw in earlier decades. That all culminated in the Macpherson report following Stephen Lawrence’s murder. That was a time that brought home a real shock to our society about how we had failed to address discrimination and inequality in our country. As I say, we have made progress in the intervening decades in our treatment of, and the opportunities afforded to, some minority groups in our society, but victimisation, discrimination, hate crime and disrespect to minorities continue today.
My hon. Friend the Member for Hayes and Harlington highlighted some of the groups that, even today, experience that discrimination: disabled people; people with mental health difficulties; and Gypsies and Travellers. There is still racism and there is still religious hatred. There are still women who are experiencing and are victims of violence, or who are at risk of it. All those groups continue to suffer from derogatory language, discriminatory behaviour, prejudice and public hostility. It is quite wrong to think that we do not need to continue to protect in legislation a positive duty to promote and improve good relations, particularly to protect the interests of minority and disadvantaged groups.
The situation is not helped when some of this hostility is whipped up by Ministers’ own language; it is not helped by language that implies that people on disability benefits are benefit scroungers or that Gypsies and Travellers are all involved in illegal encampments, arriving one Friday night, parking up with their tents and disappearing by Monday. There is too much condemnation based on anecdote, which fuels this culture of hostility. It is really important that we have a strong commission that is able positively and proactively to tackle that and promote good relations between different groups.
Julian Smith
Could the hon. Lady give some tangible examples of how the general duty actually helped the groups of people she has mentioned?
Kate Green
My hon. Friend is right. Opposition Members are wary of the commission being reduced to a mere regulator between two parties, rather than seen as an agent of social change. There is a real opportunity for a highly regarded, well-resourced public body, with the right remit, to shape and influence public attitudes. The Government’s proposals will put that work and ambition at risk.
Julian Smith
Does the hon. Lady really think that a body can make such changes? Is this not about leadership in all our public sector organisations and private companies? Does she really think that a body, however much resource it has, can achieve those changes?
Kate Green
The hon. Gentleman is right to say that we need leadership in all walks of society—of course we do. We need to see it in our businesses, schools, public services and communities. I am sure he is not saying that there is no need whatever for the state to sign up, positively and proactively, to endorse and create an institutional mechanism and infrastructure to help achieve that. But if that is what he is saying, he is very much at odds with best international practice and the relevant directives of the United Nations and the European Union. As I have said, in a country where there is still gross inequality, it would take a great leap of faith to say that we can afford to dismantle the equalities infrastructure; surely what we should be doing is building it up.
Kate Green
One concern is that the workers affected are likely to be low-paid—often women—or people with low levels of qualifications, and they will lose out most by the removal of third-party harassment provisions. The Union of Shop, Distributive and Allied Workers—I draw attention to my membership of that union and its support for my constituency party—is aware of cases in which shop staff have been victims of harassment, sometimes by customers or perhaps outside the store if customers have been asked to leave for disruptive behaviour. Those staff have used third-party harassment provisions to work with employers and ensure that steps are taken to protect shop workers, particularly late at night when few staff may be on site. The Opposition are worried that the provision has worked well to protect more vulnerable workers, and we regret that the Government now seek its removal.
The statutory questionnaire procedure has been in place since the sex discrimination legislation of the 1970s, and Labour Members are at a complete loss to understand the Minister’s objections. Far from being costly and burdensome to business, we see the procedure as helpful and something that businesses can use to focus on the essentials of a problem, and make clear to employees—and potentially to their representatives—whether there is a case to answer. As colleagues with trade union backgrounds have pointed out, in many cases, the advice received by the employee following the completion of a statutory questionnaire is that there is no case. Where there is a case, however, or structural discrimination in the workplace, surely we want to offer employees who are the victims the best possible means of uncovering and dealing with it, and maintain the strongest possible regulatory framework to enable information to be elicited, analysed, and used by employees when discrimination has occurred.
The Minister suggested that the statutory questionnaire procedure was burdensome for business. As colleagues have pointed out, however, over a three-year period only 2% of businesses—0.7% a year—completed the questionnaire. To the best of my knowledge, no micro-businesses—none of the smallest businesses for which the Minister may argue that the measure could be more burdensome—have ever completed a statutory questionnaire. If they have, it was not in the written evidence received during the Government consultation. I therefore suggest that the burden on business that the Minister seeks to portray, and the cost to business of around £1 million—as I think we were told—is pretty negligible in the context of other costs borne by businesses for the protection of workers in the workplace.
Julian Smith
The hon. Lady knows full well that the smallest businesses in our country do not really get a look-in at the written evidence sessions. They do not have time to participate, and therefore they are not represented. To pretend otherwise would not be correct.
Kate Green
I accept what the hon. Gentleman says. The problem, however, is that we did not get any evidence from micro-businesses, although perhaps for the best of reasons. I accept it may be difficult for those businesses to find the time and resources to make submissions to formal Government processes, but equally, no evidence has been presented that many micro-businesses have a problem and have used the statutory questionnaire procedure. The legislation comes from speculation rather than information and evidence, and that is much to be regretted.
Oral Answers to Questions
Julian Smith Excerpts(11 years, 11 months ago)
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The Parliamentary Under-Secretary of State for Education (Tim Loughton)
I am grateful to the hon. Lady for her comments, and I congratulate her on the first-class report, which was published today. I will speak about it more fully in about an hour and a half’s time, when it is officially launched. That report, together with the special expedited report from Sue Berelowitz, the deputy children’s commissioner, which my right hon. Friend the Secretary of State asked her to produce, will inform our progress report on the child sexual exploitation action plan, which we intend to publish in the next few weeks. That will contain urgent recommendations and details of action already under way to ensure that those vulnerable children are kept much safer than they are now.
Julian Smith (Skipton and Ripon) (Con)
T6. There have been recent complaints about the rigour and discipline of beauty therapy skills academies. Although the Minister may have had less time for a pedicure or manicure recently, will he confirm that he will bring rigour and discipline to beauty therapy skills academies, wherever possible?
Mr Hayes
Yes, the national skills academies were an invention of the previous Government, but none the less we believe they do an important job of focusing on those parts of the economy where investment in skills can facilitate growth. The academies are an important part of what we intend, but it is vital that they are led by employers, so that the system is responsive to need and sensitive to changing demand. I accept my hon. Gentleman’s support for them. He can be assured that that support is endorsed by the Government, who will continue to invest in them.
Oral Answers to Questions
Julian Smith Excerpts(11 years, 11 months ago)
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Norman Lamb
The Government are implementing many elements of the Beecroft report. In fact, Adrian Beecroft has already had discussions with officials in my Department and his report includes a lot of measures that the Department was already considering implementing. A call for evidence is out on no-fault dismissal, and it is right to examine the international evidence. We will report after that evidence has been collated.
Julian Smith (Skipton and Ripon) (Con)
May I urge Ministers to ignore the canned melodrama of the shadow Business, Innovation and Skills Secretary on the Beecroft report? Will the Minister confirm that the current call for evidence from very small businesses in Britain will be objective?
Norman Lamb
I can absolutely confirm that. It is always right to base policy on evidence—[Laughter.]
Oral Answers to Questions
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Mr Gibb
I would be delighted to return to my hon. Friend’s constituency to visit the Hazeley academy. I agree that it is vital that the history curriculum should enable pupils to know and understand the key events of our country’s history. It is one of the issues that the curriculum review is destined to address, and I look forward to seeing inspirational history being taught at the Hazeley academy.
Julian Smith (Skipton and Ripon) (Con)
22. What steps he is taking to improve the quality of vocational education in schools.
The Minister for Further Education, Skills and Lifelong Learning (Mr John Hayes)
High-quality vocational education is vital, underpinning economic growth, and vocational qualifications must enjoy the same rigour as academic qualifications. If we are to build the status of practical learning, it is critical that they do so, and that is why, alongside our focus on apprenticeships, we are incentivising schools to offer the best vocational qualifications to provide a high-quality and respected route into employment and further and higher education.
Julian Smith
Andrew Cummings, head teacher of the excellent South Craven school in my constituency, is concerned that the current focus on purely academic subjects is threatening that school’s focus and efforts on vocational learning. I have tried to reassure him—can the Minister help?
Mr Hayes
I know of the good work of that school, and my hon. Friend has been a doughty champion of that good work. He is right that good vocational education is as important as good academic learning. For too long, we conned ourselves into believing that only through academic prowess could people gain a sense of worth and purpose. I believe it is time to elevate the practical; this Government will do so.
Oral Answers to Questions
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Mr Prisk
I understand the hon. Lady’s point. Two thirds of small businesses are able to secure the money that they want, but that is no consolation to those who are not. Perhaps I could write to the hon. Lady about the community development finance institutions, which we have been funding and which are well placed to help the kind of micro-business to which she has referred.
Julian Smith (Skipton and Ripon) (Con)
When will the call for evidence on making it easier for micro-businesses to part company with their employees begin, and what will be the terms of reference?
Self-Employment
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Richard Harrington
That is a very valid point. It could help and it is part of the whole picture that I want to build up in this brief speech.
We have to tell young people that setting up a business and employing people is socially acceptable and good for the country, and that they will make a lot of money. If they want fast cars, big houses and all that stuff, providing they pay their taxes, well done to them. It is very easy in politics to take examples of capitalism not working, of people being paid large amounts of money without doing much work for it and of people avoiding tax. We all have our views on those things and I think that everyone would agree that many of those issues need correcting. However, my fear is that such matters help to fuel the view among young people that business is not a very cool thing to be in, which is not right.
A socially responsible young person should be told, “Yes, you can do the kind of occupation that is directly socially responsible. You can be a teacher; you can be a nurse; you can qualify as a doctor and help to cure cancer; you can be a social worker. Those are all very good. But if you decide that you want to go into business and employ people, providing you pay your taxes, that is as much use to the country, if not more, because you are helping many people in their way of life. You are helping to fund the teachers, the doctors and the social workers and it is a very, very creditable thing to do.” Society should say to such a young person, “Well done to you. You have done something that is very worth while. Do not believe the stuff about Gordon Gekko and greed is bad. Actually, greed is quite good. Providing you pay your taxes and employ people, you are really contributing a lot to society.”
One of the big problems in this country is leaping over that barrier to make people think. Let us consider the notion of wanting things. People will only go into business to make money. I did it to make money. I did it because I did not have any money, and I did not like not having it. There is nothing wrong with that. People have to understand that going into business is a good thing to do. When I got my business to the level of employing 600 people, it was a constant nightmare. I was often worried. I did not sleep at night for thinking, “Have I done the right thing?” My wife once told me at 4 o’clock in the morning—she did not help matters; she never says things at 4 o’clock in the morning that help matters—that I was directly responsible for the lives of nearly 2,000 people. That is quite a burden of responsibility. People might think, “He’s filthy rich,” or, “He makes loads of money.” However, whatever people think and say about those in business, they do not believe that they are performing a socially responsible function.
I want the Government and all of us who are in the opinion-forming business—that is what politics is, irrespective of what party hon. Members belong to—to realise that something has to be done to change that attitude, because it is in the national interest.
Julian Smith (Skipton and Ripon) (Con)
Does my hon. Friend agree that teachers have a major role to play? What does he think teachers need to be doing and saying to young people on the subject of enterprise?
Richard Harrington
I thank my hon. Friend for that comment. The problem is that teachers by definition have chosen teaching as a career, so it is very hard for them to communicate on that. I do not want to take much more of this Chamber’s time, but I will come on to a proposal that I think answers my hon. Friend’s question.
I am not being critical of what the Government are doing. Yesterday, the Prime Minister and other Ministers made an announcement about this year being the year of the business and said that a minibus will go around different institutions, helping to give people the idea to set up businesses. All that is very good, but the cream of young people who are thinking, “I’m going to go to Goldman Sachs,” or, “I’m going to become a top man or woman at the Bar,” or, “I’m going to be a partner at Deloitte,” need to think, “Actually, the status of my setting up my own business and employing people will launch me to a higher level in society. I will be applauded and not thought of as a person who tries to avoid taxes and should hide the fact they have bought a decent car.”
The last vestige of the class system in this country is contained in the attitude that business is a bit grubby, something to be looked down and not something that proper chaps do. Until we change that attitude, we will not have enough people setting up businesses, employing people and providing the growth that we need in the future.
Mark Garnier
Yes, absolutely. I agree with the hon. Lady. She is absolutely right on UK regulation, but we should also do that on European regulation. We simply cannot have endless regulation coming through, and we really need to see whether it is worth having.
Julian Smith
Does my hon. Friend agree that, with very small businesses and start-ups, the Government might need to be more radical than they are being at the moment? On issues such as flexible working and the right to request training, there may be an argument for exempting very small businesses and new businesses from legislation. We should seriously think about more radical measures, such as making it easier for small businesses to get rid of staff. That is politically difficult, but I would like to encourage the Government to think carefully about those proposals from Adrian Beecroft.
Mark Garnier
My hon. Friend could have been reading my speech, because my very next point was exactly that. It is vital that we help businesses. Ronald Reagan introduced a law under which businesses with fewer than five employees were exempt from a lot of business regulation, and he increased the number of jobs by 30 million as a direct result.
On a practical point that is deliverable, rather than necessarily doing something wholesale, it is vital that we have a system under which we exempt micro-businesses with fewer than, say, five employees from new legislation. We should also give such businesses a holiday when new measures are introduced. If we introduce new regulation—to follow on from the comments of the hon. Member for Solihull (Lorely Burt)—we need to see how it beds down with those organisations that can afford to implement it. If it works and it is sensible, we can translate it through to smaller businesses when we know how to implement it. We should not load it on to small business right at the beginning and expect them to tackle it and to be the crash-test dummies, when they do not really have the resources to deal with such regulations.
Another problem with regulation is that its introduction is like Chinese water torture, with one drip after another throughout the year. It is quite difficult for many businesses to tackle that drip-feeding of regulation. If we are to bring in regulation, we should bring it once a year. That would make it a lot easier for businesses to focus and comply.
Finally, there is no doubt that the Government have plenty of opportunities to help businesses on cash-flow issues. They have quite a lot of money, although, admittedly, not as much as they used to, and they have a useful cash flow. When they take on contractors, particularly SME contractors, they could achieve a number of things by having a process whereby invoices were paid within 10 days. First, that would set an incredibly good example to the business community and show that early payment is important. Secondly, the Government could push such early-term payments from the contractors to the sub-contractors. Such a process would also give them the ability to persuade their sub-contractors and contractors to sign up to an agreement to help businesses by adopting better payment terms. Those are just a few suggestions, and I am sure that hon. Members will have many others.
I am heartened to see the Minister in his place. He has been in the private sector and has worked hard in business in the past. It is incredibly heartening to see so many business people here, including the Minister. I have every confidence that he will have some helpful comments when he winds up. Much more importantly, when he goes back to his civil servants, he will have a zeal and an enthusiasm for helping small businesses that can come only from somebody who has first-hand experience of the business world.
Oral Answers to Questions
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Mr Marcus Jones (Nuneaton) (Con)
13. What recent progress his Department has made on its employment law review being undertaken as part of the red tape challenge.
Julian Smith (Skipton and Ripon) (Con)
17. What recent progress his Department has made on its employment law review being undertaken as part of the red tape challenge.
The Parliamentary Under-Secretary of State for Business, Innovation and Skills (Mr Edward Davey)
We have made excellent progress with our employment law review. Our radical package includes streamlining the employment tribunals system, doubling the qualifying period for unfair dismissal, promoting early conciliation and mediation, and simplifying compromise agreements. We have also called for evidence on TUPE and collective redundancies as part of our wide reforms.
Mr Davey
We have listened to both employer and employee concerns about the cost and complexity of going to employment tribunals, and believe that our reforms will make a positive difference to both parties. We have set out our conclusions and our response to the “Resolving Workplace Disputes” consultation. Critical aspects of our new approach include a major new emphasis on mediation and a new pre-claim conciliation service by ACAS, and, finally, a fundamental review of the rules and procedures is now being undertaken by Lord Justice Underhill.
Julian Smith
Compensated no-fault dismissal could be a great fillip to very small businesses and the employment market. Will the Minister outline the timetable for the Government’s call for evidence and reassure the House that he is completely open-minded on the policy?
Economic Growth and Employment
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Mr Umunna
I completely agree with my right hon. Friend. Of course, another question for the Government is why they will not listen to business organisations that have been calling for action. The CBI is calling for infrastructure spending to be brought forward, the Federation of Small Businesses is calling for a one-year national insurance break for every small firm taking on extra workers, and the Federation of Master Builders would like a targeted cut in VAT to 5% for home improvements, maintenance and repairs. Business organisations, from those representing the food and beverage sectors to those representing businesses on our high streets, which are suffering, are calling for a reversal of this year’s hike in VAT. What do all those measures have in common? They are all part of Labour’s plan for growth and jobs. As our motion stated, the Government must take action now to increase demand and growth and give immediate help to the high street—[Interruption.] The Minister of State, the hon. Member for Hertford and Stortford (Mr Prisk), chunters from a sedentary position. If he wishes to ignore all the various business organisations, people might put a big question mark over his judgment. It is clear that the Government need to back our plan and that they must do so now.
Julian Smith (Skipton and Ripon) (Con)
Does the hon. Gentleman not agree that the Government have been listening to businesses organisations with regard to employment law and deregulation? I am surprised that he, as a former employment lawyer, has not included in the motion a single proposal to make it easier for small businesses in Britain to take on staff.
Mr Umunna
I have given way several times, and I want to make a bit of progress.
Instead of reverting to the tired old mantras and doing over the people who work in this country, perhaps the Secretary of State could tell us what he will do to get banks lending to small and medium-sized businesses that are, by his and the Chancellor’s own admission, currently being starved of credit. We know that the Project Merlin accord between the banks and the Government failed. The Secretary of State more or less admitted as much when he said:
“Merlin was necessary but it was never going to be sufficient. I don’t think any of us pretended it was enough.”
We know that the figures published under Merlin are entirely misleading, because under the agreement between the banks and the Government a gross lending measure was adopted, not the more meaningful net figure used by the Bank of England. The truth is that Project Merlin was really no more than a public relations gimmick designed to get the Government out of a hole when banks’ declarations of bonuses were in full flow earlier this year.
For real businesses, the failure is real. The Bank of England’s “Trends in Lending” publication for last month showed the stock of lending to UK businesses contracting overall in the three months to August. The Bank’s latest agents’ summary, for this month, stated that small businesses were still reporting that credit conditions
“remained tight, and in some cases had become tighter.”
That is supported by the figures released this morning by the British Bankers Association, showing lending by the high street banking groups to non-financial businesses contracting this month.
To resolve that problem, the Government first need to change their overall economic strategy, to give businesses the confidence to borrow and grow. The small and medium-sized enterprise finance monitor published last week showed that the main barrier to future borrowing by SMEs was the economic climate, but that the other major barrier was the lending practices of the banks. The Government need to use their influence with the banks, particularly through United Kingdom Financial Investments in the case of the banks in which the state has a stake, to insist that they get money out of the door to responsible businesses that have sound business models but are struggling to access finance. In addition, they must urge those banks to adopt a better lending culture—for example, by ensuring that they have local relationship managers on the ground who get to know the business concerned.
Mr Umunna
When will Government Members take responsibility? I wish that we were still in government, but we have not been for 18 months now. It is about time that they got used to the fact that they are in government and took responsibility.
Business is crying out not for a Government who step aside and fail or refuse to act but for one who adopt an active approach, using all the tools at their disposal to create the conditions for private sector growth. For all their claims about our record, such as the ones that we have just heard, the Government have kept in place some of the support measures for business that we left them on leaving office. I should point out that under Labour, 1.1 million businesses were created. When we left office, the UK was rated fourth by the World Bank for the ease of doing business, and first in Europe. Under this Government, the UK has dropped to seventh in the global rankings. We will take no lectures from the Government on support for business.
In government, we set up the Better Regulation Executive and the Regulatory Policy Committee to improve the quality, and where appropriate reduce the quantity, of regulation on business. I note that the Government have continued with them.
Julian Smith
Will the hon. Gentleman clarify the top five deregulatory measures that his party took in the 13 years it was in government?
Mr Umunna
I cannot name the top five, but the whole reason the Better Regulation Executive and the Regulatory Policy Committee were set up was to reduce regulations by a huge number and improve their quality.
In government, we also conceived the technology and innovation centres, to promote innovation. The Government are now rolling them out across the country, and they have sought to build on the measures that we put in place to reduce the bureaucracy of Government procurement and increase SMEs’ access to it.
In many other areas, however, there has been a disorderly retreat from an active approach. The Government have undermined certainty for investment, cut the science and research funding budget by 15% in real terms and abandoned the 10-year funding plan, and they have abandoned sector strategies such as the defence industrial strategy. The Automotive Council continues, but the RDAs, which could have helped make a reality of the ambition to strengthen companies’ supply chains, no longer exist.
The Government have undermined new industries, such as green industries, as my right hon. Friend the Member for Don Valley (Caroline Flint) will outline in the debate that will follow this one. They have delayed the roll-out of universal broadband and undermined the collaborative institutions that we set up to work with businesses, such as the Office for Life Sciences and the Technology Strategy Board, which are widely respected. The higher education sector, the seventh-largest export industry, has been put in disarray by the Government’s visa changes. Support for the digital, creative and educational sectors has been scaled back. Then there is the decision to award the £1.5 billion contract for new Thameslink trains to a manufacturer that will make them in Germany, which means that Bombardier is reviewing its activities in Britain.
The Government have retreated from action, undermined confidence, failed to unlock investment, failed to deliver a credible plan for growth and failed to use action to back business. They need to back our five-point plan for growth now and put in place a credible plan to build for our long-term success. These are difficult and challenging times for businesses and people in this country. They deserve better from a Government who say, “We are all in it together”, but who, time and again, show that they have absolutely no understanding of the concept.
Julian Smith
Will the Secretary of State tell us what situation he found exports in when he arrived in his post? What sort of condition was UK Trade & Investment in and what great suggestions did the previous Government have in this area?
Vince Cable
UKTI has been radically reformed, thanks to the Minister for Trade and Investment, Lord Green. I think that it will perform an excellent function. What I found was that British export activity in the big emerging markets, which is clearly where future growth lies, had been sorely neglected for many years. As somebody put it to me, when we turned up on the beach the Germans were already in the deckchairs. They have dominated the market in these countries and we are a marginal player. It will take years to turn that around, but that is where our emphasis lies.
Gordon Banks
I agree with my hon. Friend. If we do not get our infrastructure right, we will not be in the position that we want to be in when things move forward and we will be disadvantaged. I ask the Government not to look solely at big individual projects when they are trying to regenerate the economy. We need local and regional regeneration and investment in local and regional infrastructure.
Julian Smith
Does the hon. Gentleman welcome the Government’s introduction of the Work programme, which will help many of those JSA applicants of whom he spoke, and the new enterprise allowance, which gives significant sums of money to unemployed people who want to set up a business?
Gordon Banks
My experience of the Work programme is that it is a not-working programme.
The cut in VAT to 5% for home improvement repairs and maintenance—another part of Labour’s five-point plan—would discourage the black market and encourage investment in our housing stock at a time when the Government are wringing their hands about the green deal. Experian data show that a cut from 17.5% to 5% would have produced a £1.4 billion stimulus to the UK economy in 2010, which would have got Britain building. It is working on reviewing that figure in the light of the current 20% VAT rate.
On housing, which is an important part of the construction industry, social rent starts and affordable home starts have fallen by 99%, but in 2007, there were 357,000 first-time home buyers in the UK, who generated £2.1 billion in our high streets. That is the real power of the construction industry and why the industry is so important to the whole of the UK. I hope the Government plans announced earlier this week to regenerate the housing market deliver progress, but one must ask: why have they been asleep at the wheel for the past 18 months?
On lending, we are a country of small businesses, yet the Federation of Small Businesses tells us that credit lines for financially sound businesses have been tightened and interest rates have increased. The Federation of Master Builders has reinforced the point about that failure.
The Government have announced a desire to look at credit easing, which suggests that Project Merlin has failed. Do they know how much of Project Merlin’s compliance agreements are re-signed and recycled arrangements? Do they know that banks are withdrawing overdraft facilities and setting businesses up with term loans?
Richard Fuller
I appreciate that, and I shall continue to listen intently to all the hon. Gentleman says.
The challenge that this country faces to restore growth is immense. It needs good ideas from both sides of the House and full commitment to the task. On that point, may I say gently to my right hon. Friend the Secretary of State, who is a noble individual and a good gentleman, that sometimes people feel that commitment may not be there 100% of the time from the Department, and that is a commitment to the role of the free market and business. It is as though we have at times a literary equivalent of Dr Cable and Mr Hyde. There is one part of the personality of the Secretary of State that embraces the idea of business and likes the approach of free markets, and then there is the other side of the personality that likes to hang out with a bunch of people on a camping holiday outside a well-known church musing on the merits of capitalism.
Julian Smith
Just to correct my hon. Friend slightly, this Government have done more than the previous Government did in 13 years on deregulation and freeing up British business. We must not lose sight of that.
Richard Fuller
That is absolutely true, but the challenge that we face is more immense because of 13 years of over-regulation by the previous Government, and because of the challenge of the international community. From the Secretary of State’s announcements today, I know that the sunshine side of his personality is more to the fore, and that he will demonstrate a strong and full commitment to the hard work that entrepreneurs and business leaders are putting in around the country.
I encourage the Secretary of State to take action on three further areas. First, I encourage him to work more strongly with the Treasury on ideas for credit that work for all sizes of businesses. Although there is a lot of emphasis on trying to make the banks a useful conduit of finance to small businesses, that is not working for very small businesses. Please can we look at alternative measures? Can we look again at tax relief for debt financing for our micro-businesses? For the first time, can we consider peer-to-peer lending organisations such as Funding Circle, which provides an alternative way of raising funds for small businesses? It is not enough to come forward with another policy that relies on the banks doing something tomorrow that they are not doing today.
Secondly, I encourage the Secretary of State to look at the sector that is the biggest drag on our economy, namely the bureaucratic state. If we want to create a growing economy, we cannot ignore such a substantial part of it. I encourage him to ask other Ministers to enlist our public servants and bureaucrats in the task of identifying growth. Every single day, the employees of small businesses in my constituency work very hard to create growth and the conditions for profitability, and they tell me that they are not getting the support they need from either their local government or their national Government. We need a culture change in our Government Departments. They need to say: “Our primary task—our national mission—is to support the growth of enterprise and business. What can we do every day to help people to achieve that?”
Will the Secretary of State also look at the opportunity provided by social enterprises? The Parliamentary Secretary, Cabinet Office, my hon. Friend the Member for Ruislip, Northwood and Pinner (Mr Hurd), who is the Minister with responsibility for the civil society, is doing a lot of work with social enterprises to free them from some of the burdens of regulation. Will the Secretary of State have his Department look at how the power of social entrepreneurs can be brought to bear on our public services and public sector so that they can be more productive? Social enterprises are a fantastic way to encourage growth.
Will the Secretary of State consider using Parliament to review outdated statutory instruments, laws and regulations that are a bureaucratic drag on productivity and business? Rather than using Parliament to pass new laws, we could use it to scrap existing ones. I am sure we can find time for that.
Thirdly and finally—this underlies all our efforts to create growth—I benefited in my career from two fundamental pushes on growth in our economy: building out the global supply chain and the consequential growth of financial services, which gave people the ability to buy goods and services much more cheaply than they would have got them had we relied only on a national economy; and the growth of information technology. The next source of fantastic growth is likely to be when households in India and China want to buy our goods. But that is not here today. That is not going to be here in the next five years. What we can do in that period of time is have a national campaign led by the Secretary of State to create an entrepreneurial society recognising that there are different motivations for being an entrepreneur. Not only do entrepreneurs want to make money; people are motivated by spiritural objectives. Let that be the mission and legacy of our Secretary of State.
Lorely Burt
I am grateful to the hon. Gentleman, and he is absolutely right to say that there is more borrowing than we had anticipated. However, the amount of borrowing will be going down year on year. I am sure that my colleagues on the Front Bench would agree with me that we cannot get out of a debt crisis by borrowing more. At some stage we have to start actually paying the money back. The UK is borrowing at low rates—we have that confidence. Let us just imagine how many more jobs would be lost and how many more people would be suffering if we were borrowing at 32%—that is, if we were in one of those dark places.
The motion starts with the usual party knockabout. For example, we are supposedly “choking off” growth and
“failing to use strategically procurement and other tools to drive growth and innovation”.
However, it is not true that we have failed in that respect. We have cut corporation tax, and by the end of this Parliament we aim to create the most competitive corporate tax system in the G20. Research and development credits will rise by 200% this year and 225% next year. Then there is regulation. We have scrapped the proposals that the hon. Member for Ellesmere Port and Neston (Andrew Miller) was talking about, with savings to business currently amounting to £350 million a year. Whatever we did in our little Committee, it never amounted to that sort of saving. We have also introduced a moratorium on new regulation for micro-businesses.
Then there is technology and innovation centres, and so on—I do not have time to say much more in five minutes.
Julian Smith
The exemption for micro-businesses is a key development from this Government. Does my hon. Friend think that some of the arrogance of Opposition Members comes from their never having worked in a small business, and that that absence of business experience is influencing their views?
Lorely Burt
I would not dream of criticising Opposition Members. I know that quite a number of them have run their own businesses—micro-businesses and bigger businesses, too—but I also give our Government credit for coming up with that exemption, because it is an important source of help at a difficult time.
Finance has been a big issue. We have not got it right yet: there is more lending, but we still need to do more. We have continued the enterprise finance guarantee scheme and the programme of enterprise capital funds. We are also encouraging a more enabling environment for business angel investment, taking forward a package of investment readiness through a network of growth hubs. Then there is the bank-led £1.5 billion business growth fund, to provide funding of £2 million to £10 million for small and medium-sized businesses with strong growth potential. What is more, as I am sure even the Opposition would concede, we have not failed to use strategic tools to bring forward growth. Indeed, a number of those strategic moves are ones that Labour introduced.
After the knockabout we come to the constructive part of the motion, which is very welcome; indeed, I agree with some of it. However, the plan to levy a £2 billion tax on bank bonuses—this week it is to fund 100,000 jobs for young people and 25,000 more affordable homes—is a nice idea, but as my right hon. Friend the Secretary of State said, it is just not practical. We are already taxing banks every year to the tune of £2.5 billion, on the basis of the banks’ balance sheets. That is more than the Labour party raised with its £2 billion bankers’ bonus tax—a move that the right hon. Member for Edinburgh South West (Mr Darling) has already admitted has “failed”.
Opposition colleagues also suggest reversing the VAT rise for a temporary period. That is great, but how are they going to pay for it? What other cuts will they make instead? Is this part of their slowdown programme—their “not too far, not too fast” agenda, which has so spectacularly failed in America, whose credit rating has been downgraded and whose debt is now $15 trillion? The motion calls on us
“to bring forward long-term…projects to get people back to work”.
I totally agree with that—who would not?—and I hope to see more strategies that complement the things that we are already doing, such as the Green investment bank, the green deal, house building, the growing places fund, and so on. I would also like the council house building programme to be brought forward before we receive the receipts from the sale of 100,000 council houses. Why wait? Let us build those houses now.
I also agree with the suggestion of a one-year cut in VAT on home improvements, repairs and maintenance. The Treasury is losing many millions of pounds in revenue because of a growing black market involving private customers and small businesses paying cash for jobs done in their homes. The one-year national insurance tax break to help small businesses grow and create jobs is a great idea—one for which I have lobbied for some time. However, as a start, and to make it more affordable, why not introduce it for small businesses? I would greatly like to see—