Deregulation Bill

Debate between Lord Deben and Lord Sharkey

Tuesday 21st October 2014 Lords Chamber

[Lord Sharkey (LD)]

My Lords, as the noble Lord, Lord Rooker, said, the Joint Committee on the draft Bill, of which I was a member, received a large amount of evidence on this clause. The effect of Clause 2 is to amend the Equality Act 2010 to remove the power of employment tribunals to make recommendations to employers in cases where there has been a finding of unlawful discrimination, harassment or victimisation, and where the successful claimant no longer works for the company.

In such cases, the claimant has redress. His former fellow workers may still be stuck with the conditions that led to the discrimination, harassment or victimisation of their former colleague, and that is in most cases. In 2013, only 16% of claimants in discrimination cases were still working for the employers against whom they made the claim. That means that in 84% of discrimination cases, the tribunal would no longer have the power to make recommendations to employers to take steps to improve their employment practices so as to avoid similar discrimination against their other employees.

Broadly speaking, evidence from business interests supported the clause and other groups opposed it. Business spoke in support of Clause 2, chiefly because it believed the wider recommendations to be beyond the information and expertise of the panel or that it was unnecessary because,

“the reputational risk of a wider recommendation is something an employer would take into account when making a decision whether or not to settle out of court”,

which is slightly grubby reasoning. Those who opposed the clause did so chiefly on the grounds that the system had been in operation for too short a time to provide any clear evidence about its merit or otherwise. The JCHR was opposed to the clause as was, perhaps not surprisingly, the EHRC.

At the time of our report, as the noble Lord, Lord Rooker, said, there have been 28 such tribunal wider recommendations and I understand that in 2013 there was a total of 30. That may seem like a small number in absolute terms, but it represents one in every 12 cases in 2013 where these kinds of recommendations were made.

In their response to the Joint Committee’s report on Clause 2, the Government held to the view that the clause should remain and they disagreed that the removal of the tribunal’s power of recommendations was either unnecessary or punitive. The arguments that they advanced were first that there was a clear pattern visible in the existing recommendations; namely that they focused on training for management or updating the diversity policy, which is hardly a surprise. They asserted in a magnificently unproven and probably unprovable way that it is unlikely that this pattern will change going forward or that much more could be learnt about the use of the power by reviewing it and allowing it to run on for several more years. That is of course simply a non-evidenced assertion. More importantly, there is no evidence that it can be true. The sample is simply too small.

The Government’s second argument was based, as the noble Lord, Lord Rooker, pointed out, on a survey of employers—all 28, presumably, who then received wider recommendations because of breaking the law. Only eight responded. Six of these were from the private sector and all six had implemented the wider recommendations with an average cost of £2,000. The Government were silent about the two public sector respondents. I am at a loss to understand why the Government think that this is an argument in favour of removing the power to make wider recommendations. The response level is so low that it probably proves nothing at all, but if it proves anything then surely it shows the merit of these recommendations. It shows why the power to make them should be retained.

The Minister and his team have been helpful in providing additional briefing on the clauses that we will debate today as a Committee of the whole House. It included briefing on Clause 2 and I thank the Minister and his team for that. In a briefing note on the clause, the Government make four points in defence of the removal of the power to make wider recommendations. First, there are better and less burdensome ways to achieve the aim of helping employers comply with anti-discrimination. The response points to government-led workshops although it does not say how many and says that these workshops generated positive feedback from small business owners to the simple compliance message of “Do not discriminate”. That is not hard evidence, and not really evidence of any kind. How many workshops were there? How many small businesses? What positive feedback was there on agreement with the message that you should not discriminate? What follow-up was there to see if the workshops produced behavioural change?

The Government also point to the fact, which I have noted already, that employers think that the power is not needed. That is surely not a surprise to anyone. Nor does it amount on its own to a reason for abolition.

The Government’s third argument in defence of Clause 2 is essentially that the power added little and was not necessary. They go on to repeat that the cost of compliance with wider recommendations averaged £2,000. Presumably this is based on the six companies that actually replied to the Government. If that argues for anything at all, it is for retaining the power, if that is all it costs to put right discriminatory practices in a company.

Finally, the Government point out that any wider recommendations are unenforceable under the 2010 Act and are therefore of limited effect. In their briefing paper, the Government go on to say about the removal of the power to make wider recommendations that it will not stop tribunals from making observations in their judgments about how an employer might improve their practice to avoid breaching the Equality Act in the future. In other words, removing Clause 2 means that tribunals will not be able to make unenforceable recommendations any longer, but they will still be able to make unenforceable observations with exactly the same effect. Let me be clear about this: we are debating the removal of a power to make unenforceable recommendations and leaving in place the power to make exactly the same comments as unenforceable observations. This really does not seem to be sensible or a sensible use of legislative time.

The power to make wider recommendations is in its infancy. There is no evidence that it causes harm. In fact, there is no evidence either way because it is much too soon for that. There is no evidence to suggest that abolition is needed, appropriate or necessary. As the TUC said in giving evidence to the Joint Committee, it seems ridiculous to get rid of a piece of legislation that affects only employers who have broken the law. This is not sweeping through a whole swathe of businesses that are doing the right thing. Where businesses have broken the law, they quite often find it useful to have the tribunal help them get things right. But what seems even more ridiculous is that by the Government’s own admission, the removal of the power to make wider unenforceable recommendations will leave intact the power to make exactly the same recommendations as observations. There really is no need for this clause.

[Lord Deben]

My Lords, much of the discussion on health and safety has been around the issues of believed or real overregulation. I have already committed myself to the view that there is a great deal of overregulation which it is right to stop and that there is too much regulation which has caused real and proper anger. However, the Government have to be careful, when it comes to deregulation, not to fall into the same trap; in other words, for the deregulation efforts to look like an additional activity, as if to say, “Let us see how many things we can claim we have got rid of”. I must say, very delicately, that that is what this looks like.

Before my noble friend Lord Sharkey made his point, I was going to put it in the form of a question. I was going to ask what sanctions there are against a tribunal that decides that, irrespective of the fact that it does not have the power to do so, it is going to make a comment. I suspect that there are no such sanctions, which means that the tribunal can in fact say what it can say under this power that is being removed. It might be argued, when the power was originally put forward three years ago, that it would have been sensible to have had some kind of recall procedure to make sure that when the recommendations had been made, someone would listen to them. That might have been argued, but it was not.

It seems that we have here a power that is merely a statement of what is a power in any case. It is not onerous. So we are spending time removing a power that exists, whether you have it or not. Even so, it has a purpose, which is that tribunals ought to think through not just the case in front of them, but how the case fits into a pattern of behaviour or a way in which a particular company appears to approach certain things. It does not do any harm to say to the company, “Look, you’re guilty in this case but don’t you think it would be more sensible if you had somebody in charge of this, or if you recognised that in that particular factory in that particular place this was likely to occur?”. You can imagine the sorts of points that might reasonably be made by a reasonable tribunal.

If I may say so, this is so unimportant a change that if it is pushed to a Division, I shall be happy to support the Government on the basis that it does not mean anything. But I ought to say to the Government that it is not sensible to bring forward this proposal in these circumstances merely to add one to the number of deregulation activities that have taken place. I say that to my noble friend because I believe in deregulation and want to get rid of a whole lot of stuff that is not necessary and is telling people how to lead their lives, which they can do perfectly well themselves. But let us not bring that into disrepute by having the kind of discussion that we are, unnecessarily, having today and which I have, no doubt unnecessarily, prolonged.

Financial Services Bill

Debate between Lord Deben and Lord Sharkey

Monday 15th October 2012 Lords Chamber

[Lord Sharkey]

Will the Minister clarify a point in sub-paragraph (3)(b) of paragraph 28 in Schedule 9, which would survive whether or not the amendments of the noble Baroness, Lady Hayter, were accepted? The sub-paragraph adds to the sentence in FiSMA the words,

“, or by 2 or more persons who include a person not directly involved in establishing that evidence”.

The whole paragraph now reads:

“That procedure must be designed to secure, among other things, that the decision which gives rise to the obligation to give any such notice is taken by a person not directly involved in establishing the evidence on which that decision is based, or by 2 or more persons who include a person not directly involved in establishing that evidence”.

FiSMA already permits a procedure that allows, in certain circumstances, the decision to issue a notice to be made solely by a person directly involved in establishing the evidence on which that decision is based. Why has the Minister felt it necessary to change this? Why, in particular, regularly allow the decision to issue a notice to be made by a person directly involved in establishing the evidence for the notice if he or she can persuade just one other person to agree? Does he have a particular type of case or set of circumstances in mind that would make this desirable or necessary, or is there some now apparent defect in the current regime as exemplified within the FSA by the Regulatory Decisions Committee?

[Lord Deben]

I hesitate to return to the previous discussion, but I just remark to the Minister that his whole list of examples of what this might have prevented of course misses the point. My point was that we could have done all those things with the RDC. The real question is: who makes that decision? I have never had an explanation of why it is necessary to have a power that is never referred to any independent group. That is all I am interested in and I feel very strongly about it. We have recently been trying to complete a very valuable thing called “treating customers fairly”. I want all customers to be treated fairly, and I entirely agree with the speech of the noble Baroness, Lady Hayter, who is absolutely right.

I say to the Minister very personally and directly that when one of those most likely to be a senior regulator tells the industry that he intends to shoot first and ask questions later, he should understand why the industry has some concerns. That is all I say. All I am asking is that before such a decision is made, there should be reference to an independent body, and I think that the proposals put forward—albeit, as the noble Baroness rightly said, that they might need a little tweaking here and there—would seem to everyone to be fair.

We have the same situation—parallels have often been drawn—in police prosecution when someone outside asks whether this is a proper circumstance and whether it is likely to stand up. That is all that is necessary. Do that and most of us, I think, would be perfectly happy. Our issue is that, without making things more difficult in these debates, there are too many examples of decisions made that appeared to be hasty and when people have not looked too carefully at the details. This would make sure that they do.

All I say to the Minister is that he would have pretty overwhelming support for the changes that he wants if he were prepared to do what the noble Baroness has put forward. I would certainly be happy to argue that. If he does not do that, this will be difficult to support, and I am interested in the point that my noble friend has just made that there seems to have been an attempt to move even further away from what we should have.

I have one other point. The key thing is that the murmurings that somehow the RDC will disappear would be overcome by having this measure in the Bill. It is not unreasonable to have the concerns that people have, and I have not yet seen why introducing this measure would make things more difficult or less transparent. I would be happy to take the risk of people being warned and turning out to be guiltless, if it were done with this degree of protection. Then the Minister would have us all on his side.