Enterprise and Regulatory Reform Bill

Julian Smith Excerpts

Tuesday 16th October 2012 Commons Chamber

[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.

--- Later in debate ---

[Julian Smith]

Will the hon. Gentleman give way?

[Mr Wright]

I have missed the hon. Member for Skipton and Ripon (Julian Smith) over the course of the summer, and I remember with affection some of his interventions in Committee. I welcome him back; it is good to see him.

[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.

--- Later in debate ---

[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.

--- Later in debate ---

[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.

[Julian Smith]

Will the hon. Gentleman give way?

[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.

--- Later in debate ---

My amendment should be considered in the context of what the Minister said about the future of the Equality and Human Rights Commission. I was one of those who did not agree with the proposal to bring together all the individual bodies, such as the Commission for Racial Equality, in a single organisation, but it was agreed to nevertheless, and I thought that at least we had reached a point at which we could proceed with a well-resourced organisation implementing a body of legislation, duties, powers and responsibilities. However, as the Minister has said, the Equality and Human Rights Commission is now under financial review, and as has also been said, its budget has been cut by 62%. The staffing loss is not just “above 50%”, as has been claimed; it is 72%. There has been review after review, and now, adding to the uncertainty, there is the promise of a zero-based budgeting exercise and a further review that will take us into 2013. I think that the organisation is being deliberately destabilised, and is being set up to fail.

[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?

--- Later in debate ---

[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.

[Julian Smith]

He implied it.

[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.

--- Later in debate ---

[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.

--- Later in debate ---

[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?

--- Later in debate ---

[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.

--- Later in debate ---

[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.