Enterprise and Regulatory Reform Bill

Baroness Greengross Excerpts

Wednesday 14th November 2012 Lords Chamber

[Baroness Greengross]

My Lords, as many noble Lords have spoken about equality and human rights issues, I decided to focus today on other issues and start by declaring an interest as chair of the Associate Parliamentary Corporate Responsibility Group, and also as a vice-president of the Local Government Association. It is difficult to argue with the expressed aims of the parts of the Bill which deal with employment and aim to encourage growth and employment through, where appropriate, the simplification and reduction of the regulatory burden. We know that unemployment is a major issue and it is therefore a major corporate social responsibility issue.

It disproportionately affects the most disadvantaged in our community, whether because of where they live, their ethnicity, their educational background or other socioeconomic characteristics. Businesses of all sizes hold the key to addressing this issue through growth and through the way they recruit, retain and develop staff. Smaller businesses often work in the most deprived communities in our country, and we should all commit to helping SMEs and social enterprises to create jobs, particularly in deprived communities. I am therefore broadly supportive of any legislation that will streamline employment law and disciplinary procedures, particularly for small businesses. At the same time, however, there are dangers that the very same communities may be the most vulnerable to unchecked unethical behaviour. The key will therefore lie in the detail, and I look forward to addressing some of those details in Committee.

Like other noble Lords, I welcome the concept of the Green Investment Bank and its stated purpose. I hope that it will favour SMEs and social enterprises developing innovative products and processes to improve environmental sustainability. Coupled with Big Society Capital, this appears to provide a significant opportunity to channel funds into new sustainable business models. However, I suspect that one challenge may be to find investment-ready business programmes, and I therefore hope that the Minister can assure the House that the Green Investment Bank will work with intermediaries who can help identify and support appropriate businesses and programmes in much the same way as Big Society Capital is doing.

I welcome the principle of reducing red tape to help smaller businesses to grow and to encourage them to be more confident in employing staff. I also welcome, in terms of employment, the move to statutory arbitration as the first step involving external parties. Many disputes, as we know, can be settled through this common-sense and conciliatory approach, to the benefit of both parties, the wider workforce and business. According to the British Retail Consortium, pre-claim conciliation currently resolves 70% of voluntary cases, and the Government’s impact assessment implies 14,500 tribunal cases could be avoided each year. It would also avoid the attendant stress and costs for both parties. Streamlining and simplifying processes, including the use of legal officers in determining low-value straightforward claims should also be helpful. Nevertheless, there is a danger, inherent in judges sitting alone in determining points of law under employment appeal tribunal procedures, that they may be less well placed to understand some of the diversity issues involved, and this could increase discriminatory outcomes. A two-tier system of employment rights might also involve dangers. The emphasis should be on proportionate and outcome-focused legislation, providing a clear framework for all employers and employees, regardless of size.

Regarding competition, I am wondering whether the restrictions on any kind of collaboration, such as that carried out by the water industry on conservation, will prevent action being taken that would actually assist small businesses, deprived communities, and environmental objectives. Some advice from the Minister here would be much appreciated. We know that 4.5 million UK small businesses form the lifeblood of this country, providing goods, services and employment to the majority of our people. I see the Bill as a mechanism to encourage and facilitate larger organisations, especially in deprived communities, to engage with their local small businesses, act responsibly towards them, and advise and help them through working with them to overcome existing barriers to growth. Business in the Community, in its innovative recent series of enterprise inquiries, found that such barriers included access to supply-chain opportunities, procurement processes that discriminate against small businesses, and the prohibitive costs of accessing large contracts because of pre-qualifying requirements such as liability insurance, industry standards and access to affordable finance.

Overall, the BITC inquiries have demonstrated how powerful procurement can be as a source for economic growth at local level. The public sector has set a good example in this by tending to favour SMEs in terms of procurement and I believe that the new public services social value Bill will support this trend further, including its focus on social enterprise, which will maximise the positive social impact of public sector procurement. As part of the scrutiny of this Bill, it would be of great value to spread the practices outlined in the social value Bill to the private sector, including the further development of the principles underpinning values-based procurement.

I welcome the Government's proposal to extend the powers of employment tribunals to require employers to conduct an equal pay audit, if the tribunal finds that they have discriminated on pay. This is welcome and it will introduce a mechanism to deal with potential discrimination that is evidenced by pay gaps, particularly in terms of gender, disability and ethnicity.

I note that the provision in Clause 74, which inserts new Section 139A(4) into the Equality Act 2010, allows Ministers by order to specify further details of the new power, including,

“the content of an audit”,

and,

“the powers and duties of a tribunal for deciding whether its order has been complied with”.

In relation to these points, I suggest that in order for the new power to be effective there needs to be provision for sanctions to apply where an employer does not conduct an equal pay audit, or suitable alternative, and does not implement the action plan following a tribunal order. Implementing and monitoring the necessary changes is one of the most important aspects of an equal pay audit and must be insisted upon. Employers need to be made aware of the expectation to do that within the time limits that will be placed on them and of the sanctions that they will face if the time limit is breached.

There is also a proposal in the Bill to amend the Public Interest Disclosure Act in terms of a public interest test. There are some concerns about this proposal as the purpose of PIDA is to prevent disaster and to encourage workers to speak up when they have suspicions. As many noble Lords have pointed out, issues that at one point seemed trivial may in fact be indicative of underlying problems in an organisation and could be the tip of an iceberg. I believe that a wider comprehensive review of this whole subject is needed. If we do not do that, it will be a missed opportunity to address some of the legal loopholes that exist, which include a gaping hole in the protection if workers are victimised by co-workers for raising a concern; making sure that all workers are adequately covered; clarifying protection for GPs; and ensuring that workers who raise concerns, including the police and professional regulators, are protected.

Finally, in regard to Clause 60, the Bill should ensure that primary authorities and local authorities are not overturned by central government when they intervene in local partnerships by directing councils to follow inspection plans. I believe that central direction may reduce flexibility and innovation at a local level and goes against the localising agenda of the coalition Government.