Enterprise and Regulatory Reform Bill

Lord Deben Excerpts

Wednesday 5th December 2012 Grand Committee

[Lord Brooke of Sutton Mandeville]

My Lords, this intervention is not intended to be unhelpful or mischievous, but I cannot help remarking that in earlier amendments there has been heavy concentration on there being equal representation on both sides. I notice that there is the possibility of a legal representative in the procedure recommended by the amendment. However, I am not sure what powers that that gives the employer if the employer wants to have a legal representative there as well.

I realise that there are two answers to this. One is that of course the employer would be entitled to have a legal representative there because he was the employer. Alternatively, to go back to what the noble Lord, Lord Monks, said about the introduction of silks into the case—about which I am in no way sensitive—there seems to be a feeling on the part of those who have propounded the amendment that if there is going to be a legal representative for the employee, they totally understand that the employer will have one too. However, the absence of those words might otherwise be used against the interests of the employer in the discussion that was taking place.

[Lord Deben]

My Lords, I declare an interest as an employer. I make the point that these discussions are much better done on the relevance of the facts and the nature of the argument. I really could not listen to the comments about Mr Beecroft without suggesting that the idea that we should discuss this as if it were “Beecroft-lite”—I think that was the phrase—rather than as a proposition to be properly discussed for its nature is rather a sad thing. If people are talking about “Beecroft-lite”, I must not be moving in the right circles; I have heard no one use such a phrase.

The real issue is: do we have the right balance at the moment? Is it sensible or not to allow employers, in circumstances where this seems to be a better answer, to offer, not impose, an arrangement that includes a payment of this sum? It seems a perfectly reasonable suggestion, and we should not be arguing about it because someone we do not like did not suggest it but suggested something else, and now a Government we do not like are actually bringing forward something different and it might be rather close to that. Frankly, that is not a very good argument. We have to have an argument about the facts; and the facts seem to be that this is a moderate change that would in many circumstances be very convenient for both workers and employers.

[Lord Phillips of Sudbury]

My Lords, I hesitate to intervene, but I read Amendment 20G as having a different impact from the one that its mover has suggested. It may be that my legal wits are failing me, but surely new Section 111A(2), which it intends to amend, merely defines what the pre-termination negotiations are in subsection 12(1). It states that,

“‘pre-determination negotiations’ means any offer made or discussions held … with a view to”,

there being agreement between the employer and the employee. I do not see where the amendment comes into that. It is irrelevant in terms of who may assist the employee in arriving at that agreement, be it a trade union official, a workplace representative or a legal representative. The way that the amendment has been moved is not consistent with its potential impact on the clause concerned.

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I think the Minister said at the end that he wanted to come out of this Bill hoping that the changes he made somehow restored a balance of fairness to the workplace, but he did not provide the evidence of what he felt was wrong. When he comes to wind up, or perhaps in later parts of the discussion, can he tell us what the evidence is to suggest that there need to be changes of this radical nature in this part of employment relations? Can he give us any estimate of the growth that will come directly from the changes that he is proposing in the Bill? Will he be able to give us some sort of concrete figures to back up what he is doing? If we are to have a decent relationship between employers and employees, if we are to create growth and if we are to have employment that people will want to come into and earn satisfactory remuneration from, while contributing to the economy and to our society, surely this is not the way to do it.

[Lord Deben]

My Lords, may I intervene for a moment? I was very impressed by that last speech and thought that it was presented exactly in a proper way—although I do not entirely agree with it, as it is not a charter for bad employers that is being placed in this clause. Let me give the Committee an example of when this clause would be very helpful. It is a real example but, for obvious reasons, I am putting it in a way that could not be traced back to an individual. Somebody had been working for a company for some years but was increasingly unable to cope with the work that they were given. Had that person gone to a tribunal, the details of that lack of ability would have had to be discussed at length because that would be necessary. The employer concerned was a good employer. He sought to give that individual the recompense which they might have got in a tribunal while avoiding the tribunal, which would have been particularly difficult. Under the law as it stands, that was very difficult to do.

All this measure does is to give an opportunity for employers to look for the best way to solve many of these problems. I can think of many occasions on which a perfectly legitimate and reasonable solution could be brought about in this way. After all, it is not a compulsion; it is perfectly possible for people to say, “I want to go to a tribunal”. Therefore, I do not understand why we feel that people are unable to make that choice, or why employers should be refused the possibility of offering that choice.

It seems to me that the Minister is right in saying that this is a very small change but I can think of a number of occasions on which good employers would be able to choose it very effectively. My one concern about this discussion is that we seem to be moving back to a concept whereby somehow or other any flexibility in the law is advantageous only to bad employers. The truth is that the law at the moment makes it more difficult for good employers to do the best thing. As somebody who has to deal with these matters, I believe that most employers in this country are good and that they seek to do things properly. This change will make it easier for good employers to behave properly in circumstances where the necessary paraphernalia of the law would be best avoided in the interests of the employee.

[Lord Young of Norwood Green]

I do not want anecdotally to try to assess whether the majority of employers are good, bad or indifferent. They occupy a spectrum. Many are good and others are not so good. I say to the noble Lord, Lord Deben, that settlements are currently made outside the tribunal. We do not need to go down this road. I am sorry but the only interpretation we can put on this is that it encourages bad employers. Where does it encourage proper appraisal procedures or proper training procedures? If we really thought that this was about restoring balance, encouraging good practices and good behaviour and encouraging extra employment opportunities, as my noble friend Lord Stevenson of Balmacara said, then of course we would support it. However, in our view it does none of those things, which is why we strenuously oppose it.

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[Lord Brooke of Sutton Mandeville]

My Lords, I hope the Minister will regard this as a late contribution to his consultation, but since the academic research on which it is based is 50 years old, and I have no idea whether it has been updated, he does not need to take it very seriously. I recall that when I set out in business 51 years ago, some very detailed academic research had been done in the context of executives—I am not necessarily talking about the shop floor—which found that each employee had a particular gradient for the ascent of their salary. If they went above a figure, whatever the figure was on the line, they were highly likely to fail. If they went below it, they were highly likely to seek another job. The research was sufficiently comprehensive to be an interesting observation and contribution to the process.

[Lord Deben]

My Lords, I will make a simple statement. We have to get an atmosphere in Britain in which employers are less frightened of taking on more staff. I have to say to the Opposition that, if you are an employer, for a long time now there has been a general feeling that you are better off not increasing the number of people you employ. Some of us have fought against that and employed more and more people, but it is not a general trend. I think the Opposition, and particularly the Trades Union Congress have got to come to terms with this psychological fact. It is important for employers to feel that the problems that may open up for them if they make a mistake in employing someone are at least reasonably limited. That is why the Government’s approach in this Bill is absolutely right—it simply, delicately and very slightly seeks to shift the balance so that employers begin to feel that there is a real reason for them no longer to be afraid.

The trouble is that, in this whole discussion, there are 200 years of accumulated dislike of the concept of employers. I find that very hard to understand. The noble Baroness, Lady Turner, speaking from the TUC brief and from a long history as a negotiator, could hardly hide from us the feeling that people ought to employ people and that they will do it automatically. The truth is that we have found, over the past few years, an increasing reluctance to employ, although we ought to have a society in which we restrain our use of material resources and extend our use of human resources. That is what sustainability actually means. However, to do that you must have a format within which people are not so worried that they do not employ.

The very moderate steps being taken here are essential if we are to see an increasing number of people in employment. The unemployment figures are much better than many thought they would be, and I think this Bill will help. If it helps, then it will do more good for the working people of Britain than anything else. I am very unhappy that the Opposition are suggesting that the Bill is in some way anti the workers in factories and businesses; it is not. It is a mechanism to get more people into jobs by removing the feeling that employment is too dangerous an activity to step further into than you really have to. That is the change we have to make and we need to make it now.

[Baroness Donaghy]

I do not want to prolong things as I realise that we are winding up. We had this debate when we were discussing the regulations on employment tribunals and the noble Lord, Lord De Mauley, was in the lead. The very same remarks as those made by the noble Lord, Lord Deben, were uttered then by the noble Lord, Lord Jones of Birmingham. This is not a new debate. The only thing that I would say is that some of us come from a climate—I will remind the Committee that I was chair of ACAS—where we support employers as well as employees. We want to create good employment relations because we believe that that is good for growth in Britain.

We know that companies fail because they are sometimes badly managed and sometimes undercapitalised. I do not know of many companies that failed simply because an employer could not get to grips with getting rid of a bad employee. I have been a manager myself and have dismissed people, and I fully accept that there are poor employees. However, what we need in this country are decent skills and a good vocational education system, and I think the Government are trying to tackle that. We also need good management—something that I do not believe has been sufficiently emphasised in this discussion—and we need to be able to explain to employees where they fit in in the scheme of things so that they understand that and feel involved. Those are the points that I wish to make. This is not a new debate.

[Lord Monks]

I shall not detain the Committee for very long. I was disappointed to hear the noble Lord, Lord Deben, make the points in the way that he did. Not only is this not a new debate; it is an old debate. It was debated in this Parliament in Victorian times in relation to intolerable factory conditions. It is a debate about sending children up chimneys. Noble Lords can wince at that but the debate is an old one. I recognise it and have heard it in many employer circles. I recall that over the 10 years from 1997 to 2007—I am not making a party-political point here—we added a million jobs in this country. The employment market boomed. As noble Lords will know, a large number of those jobs went to migrant staff—although that is another issue for another day—but the fact is that there was an incredible expansion of jobs at that time.

[Lord Deben]

The noble Lord must remember that almost every one of those jobs was created by the Government and paid for by the taxpayer, and that has been a significant burden for Britain. We are now creating proper jobs which make money for the nation. It is a wholly different situation. I can create a million jobs if I pay for them out of taxpayers’ money. That really is not an argument that can be put forward.

[Lord Monks]

That is not a constructive suggestion. Many of those million jobs were in the private sector. Unfortunately, far too many of them were in the south-east of England and not in the poorer regions. I accept that the noble Lord has a point in that the public sector was the major driver of the economy and of the regeneration of our cities in the north of England and in Scotland and south Wales. A large number of jobs were created. There have been some exaggerated claims about the possible effects of the national minimum wage and so on but that is probably another debate for another day and well beyond the scope of this clause. However, in the OECD league tables, the British labour market is ranked number three for flexibility. This country is the third easiest when it comes to employers being able to sack people. I wish that employers would stop moaning about this, look at some of the evidence from abroad and get on with seeking to help to increase employment by looking at what they can do themselves and at the changes that the Government can make, possibly in relation to national insurance and so on. That would boost employment opportunities far more than giving a licence to some employers—I think that they are a minority but they are not very good employers—who would take advantage of these kinds of provisions.