Enterprise and Regulatory Reform Bill

Lord Bates Excerpts

Wednesday 14th November 2012 Lords Chamber

[Lord Bates]

My Lords, when I previously have participated in debates with the noble Baroness, Lady Ford, it has often been about the Olympics and I have always paid tribute to the tremendous work that she did in her role. But, on this issue, I could not be more opposed to her assessment of the Government and whether they have an enterprise policy. Yes, they do have an enterprise policy; namely, cutting taxes, freezing business rates, cutting taxes on jobs, cutting regulation and encouraging start-up businesses. By every name, that is an enterprise strategy. The noble Baroness slightly protests but let us look at some of the numbers. It is quite interesting that, if we look at the past year, the UK has created 250,000 new businesses. That was the fastest rate of growth in new business establishment that we have ever known in our history. There are now 4.8 million private businesses in the UK, which employ 23.9 million people. The Government need—in a sense, it is what this Bill seeks to do—to signal whose side they are on.

The message which seems to be coming through this legislation is, “Listen, we are on the side of the wealth creators, the creative minds, the people who take a risk and those who create a job more than going out to get a job”. Why are we on the side of those people? We are not in the slightest hard-hearted, harsh people. We care for the 2.5 million people who do not have a job. What about their employment rights to get into work, to have a future and to have a job? We need to state absolutely that we are on their side.

There has been a view that successive legislation has paid far too little attention, particularly, to small businesses. In this Second Reading, I want to focus on small businesses, which are the only type I know. I wish that they had been big businesses but it turns out that I have spent my life in small businesses and I know how important they are. In conversations with officials, development agencies and people like that, they all seem to roll off the tongue that a small business is something like 100 employees to 500 employees. I say to that: get a life. Most small businesses are one person, or a husband and wife, selling things in the shop during the day, and going upstairs and filling in the books at night. They might have one or two part-time employees. These people are the backbone of this country and its economy. We depend on their success to pay off our debts and to fund the public services that we all value. Therefore, we need to treasure these people in a way in which all good employers would treasure their employees because, in a sense, they are part and parcel of the overall success.

The fact that we are focusing on how to free up those businesses is very important. I know that the Minister is acutely aware of this point, a point to which I will return in Committee. There is an impact assessment that I want to hear repeated time and again. I do not want to hear, “What does this mean for the big FTSE companies which can employ government relations firms, PR firms and pummel Members of your Lordships’ House with lots of good, legal briefings on what should be happening?”. What about people who do not even know that this legislation is going through the House but who will feel its effects through enforcement? What will be the impact on those people? How can we make sure that this will demonstrate that the Government are not on their back but on their side? That is very important. What does it mean for the businesses with fewer than two or three people?

When we come to the relevant sections of the Bill, such as employment provision and unfair dismissal, that is important because if you happen to be a major corporation or a major business, you probably have an HR team. You hire your firm of executive search and selection consultants, which produce a shortlist and do all sorts of psychometric testing et cetera. People are brought in. They go on all sorts of training schemes and visit different offices around the world and what have you. Yet, still, with all that, big companies make some very big mistakes in employing the wrong people.

What happens if you are a one- or two-person band and you are taking on another person? You have never been trained in a human resources department and you do not have that expertise to call on, yet you are effectively going to share your income with this person and you have to make sure that they deliver to the required standards. If it is possible for big companies to make mistakes, of course it is possible for smaller companies to do so.

At the moment, if an employee feels that his or her case is being dealt with unfairly, they can go to the employer tribunal. The Bill suggests that people ought to go to arbitration first as that is less costly. I was persuaded by some points in the briefing note that we received which showed that in many cases people were effectively doing a trade-off. When you have a small business and you have to keep the office open during office hours and you are summoned to appear at an employment tribunal, that is an additional cost that you will have to bear that a larger company does not because they can simply dispatch someone to go to the tribunal or dispatch a lawyer to it to act on their behalf. Therefore, it seems to me that we ought to treat big and small businesses differently. The trade-off suggestion was that people would effectively be advised to say, “Listen, if you contest this in an employment tribunal, it will cost you around £8,500. However, if you just agree to it, the average pay-off is £5,400. So, on average, you will be better off if you just settle rather than go through the process”. That does not seem right. Of course, it is right that everybody’s rights ought to be protected. There ought to be conciliation, but the fact that at present only one in five people go to the arbitration and conciliation service first and 80% go directly to the employment tribunal seems wrong. It is like people who are having marital difficulties rushing off to the divorce court rather than trying to settle their difficulties through Relate. This is an important issue and those changes would be helpful.

The primary authority function is very important. Dealing with local authorities is often frustrating. It is often said that if you want help from local authorities they send somebody on a bicycle in a couple of weeks’ time, but if it is a health and safety or trading standards matter they come galloping along in a coach. There is a huge disproportion in what local authorities believe their role is. We need to look carefully at local authorities and ask what they are doing to help businesses. They seem to have many more people employed in the policing functions of their organisations than in those areas that assist business, and that reflects badly on their priorities.

The Bill is welcome. I look forward to the Committee stage. As I say, we need to focus on what it means for small businesses in this country which are the backbone of our economy.