Deregulation Bill

Lord Deben Excerpts

Tuesday 21st October 2014 Lords Chamber

[Lord Stoneham of Droxford (LD)]

My Lords, my personal position is that we should not bother to amend this aspect of the Health and Safety etc. Act, but I also accept that, although there are arguments on both sides, the chasm of disagreement is not as great as either side might want us to think.

There are certain bêtes noires of our society which are blamed for most of our problems, whereas in reality the positive contributions of those organisations are often greater. One of those is the Health and Safety Executive. The perception of that organisation often gets in the way of reality. The health and safety legislation has assisted huge improvements, as indeed have better management practice and staff involvement to address poor work practice and productivity related to poor safety conditions.

The questioning of the working of the health and safety legislation and the European directives associated with it was probably to be expected from this Conservative-led Government, but Professor Löfstedt may have disappointed many when he said that no radical reform was needed and that the problem was less with regulations and more with the way in which they were interpreted and regulated. However, one feels that he had to say something to come up with a political proposal. He advocated that those self-employed whose work activities pose no threat to others should be excluded, which would help reduce the perception that health and safety is inappropriately applied.

The reality is that there is not much of a burden on the self-employed. That was proved in the Government’s consultation. If you do not believe the Health and Safety Executive, even the mighty Engineering Employers’ Federation, as the noble Lord, Lord McKenzie, told us, supports its view, stating:

“It is a myth to suggest that the self-employed are singled out by the regulatory authorities for inspection. This is not the case nor is there a record of prosecution against the self-employed, except in a few cases where their activities have or could have impacted others adversely”.

If such burdens were so great on the self-employed and on small businesses, how do we account for the huge growth in self-employment and business start-ups under this coalition Government?

There is a problem with excluding general categories of self-employed for whom health and safety is not a burden. You end up making the regulations more complicated and less simplified, which should be the objective of the legislation. The self-employed are going to have to know whether they are excluded. To many, this might mean that understanding the regulations will be even more difficult than it is now, and that we are going to have all sorts of categories, whether it is drivers, removal people, carpenters and all trades people, construction workers, bee-keepers and so on, excluded from this provision in the Deregulation Bill. The general view that this change is not worth the candle is one which I share, but if we are to have it—and I accept that we probably are—we must see the list of exemptions to reassure people that no real harm is going to be done.

[Lord Deben (Con)]

My Lords, I declare an interest as the chairman of a company that from time to time gives health and safety advice and as a former Minister for health and safety. I start from the assumption that there is something a bit peculiar about an outside body controlling the way that an individual shall disport himself in his own business—particularly if it is held in his home. That is not unreasonable. More and more people work at home. We are changing the law to make it impossible for people who rent accommodation to be told that they cannot work at home. There are many jobs that people do at home where, frankly, telling someone that they should not stand on an upturned waste-paper basket to get something down from a shelf is an intrusion.

That is my basis, so I do not come to this with any antagonism. There is truth in the feeling that the health and safety regulations have, whether because of their application or because of the perception, stopped a whole lot of activities which it would be better not to have stopped. I also know that many of those who are opposed to the European Union have used this as an excuse to bash the European Union when, of course, almost all of it is our domestic attitudes, and the European Union has adopted British attitudes towards health and safety. I often point out to people that the ease with which the European Union is blamed for things is one of the problems with people’s perception of that very important institution to which we belong and to which I trust that we will fight to ensure that we go on belonging.

However, there are some real problems here that have not been approached. Perhaps I may give some practical experience. Recently, I talked to someone who had been held responsible for an accident in premises which he owned and oversaw by a self-employed person who did something dangerous to himself, but not on his own property but on that of the person concerned. We have to face the odd issue that if we are not very careful, we will have circumstances in which the employee of a firm will be protected and the self-employed will find themselves protected or affected only when they are working somewhere else. Does that mean that a self-employed person who has no responsibility under the Act to protect himself nevertheless has a case against someone else for his own actions, because they happened to be on their premises? That may not seem to be a general activity, but it is a bit more general than some would like. That would bring no benefit to people’s approach to health and safety legislation.

I use that example not because it is the most important, but because it makes me wonder whether, in the speedy time in which the Bill has been discussed, we have thought through all the ramifications. Having been a Minister for health and safety, I have to say that it is a very complex area. Apart from the very real sense that people feel that we have overdone it in many concerns, let us also accept that it has had remarkable success in protecting people, sometimes from themselves.

That brings me to my second point. My noble friend raised the argument of whether, if you have sufficient people exempted from cover, those who are not covered will know whether they are exempted. In other words, there seems to be a real complication about how people get to know whether they should be there or not. That in itself is one of the things that will bring the Act into disrepute. People will say, “I don’t know if I am covered. Perhaps I had better find out—I had better get somebody to tell me”. Frankly, they will find themselves in precisely the position from which the Government are, absolutely rightly, trying to protect them. I have a real issue with the complications which inevitably come if we are dealing with this.

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[Lord Wallace of Saltaire]

My Lords, this has been a short debate. I recognise the worries that have been raised. I thank the noble Lord, Lord Curry, for his speech. I emphasise that this is very much about the Red Tape Challenge and removing both real and perceived burdens on businesses. I stress perceived burdens because it is a disincentive to set up a business if you are intending to work on your own if you think that you face a tangle of regulations that it will cost you money, and take you a great deal of time, to work through and understand. The question of perception is therefore not at all unimportant to this Bill. On the other hand, I recognise that much of this is not enforced, let alone inspected, when it comes to people who work on their own, quite often in their own homes, so there are shades of understanding on all sides of the issue.

When I think about the self-employed, I tend to think about people in my profession, academia. I can recall two accidents in academics’ homes that I am aware of, in which bookcases became overloaded with books and collapsed. I regret to have to admit to your Lordships that one of the bookcases in question I had put up several years before; we had then sold the house to another academic and the bookcase very nearly collapsed on him, so in that sense I am perhaps liable. My DIY skills are not as good as they should be.

We recognise that people working in what one has to say are the intellectual trades or in the service industries—accountants, lawyers working at home and so on—on a self-employed basis are not in the business of high risk. All regulation is a question of how much risk one is prepared to accept, how large the risk is and how burdensome regulations will be. That is a constant trade-off that all Governments and Administrations have to consider, and that all courts when asked to review them also have to consider. The question of the balance is very much part of what we are now dealing with.

The noble Lord, Lord McKenzie of Luton, asked about people working in partnerships and whether they are exempt. I can tell him that if they are self-employed within the definition in the Health and Safety at Work etc. Act, they will be exempt unless the activity that they are undertaking is on the proscribed list. The definition of “self-employed” is not altered by this change. The noble Lord quoted paragraph 90 of the HSE review on this. I had indeed looked at paragraph 90, and what is said in paragraphs 91, 92 and 93 modifies what is said in paragraph 90, to the effect that we should not expect adverse health and safety impacts for the workers themselves and that behaviour is not likely to change due to the exemption. Again, we are dealing with degrees rather than sharp distinctions, one for another, and with perceptions as well as realities.

To introduce some numbers, as has been stated in the debate the number of people who are self-employed has grown considerably over the last 20 years, particularly over the last 10 years. On figures for accidents and fatalities, in the years 1992-93 there was an average of 81 fatalities among the self-employed per year; in 2012-13, there was an average of 51 fatalities. Many of these accidents involved electrical failures, or people who are electrocuted in the home or whatever it may be, as well as anything that may involve anyone else who had visited them.

I will ensure that I have answered all the other questions. The noble Lord, Lord Stoneham, and my noble friend Lord Deben asked whether we have anything specific about premises. This proposal is specific, as I mentioned in moving it, to Section 3(2) of the Health and Safety at Work etc. Act. Self-employed people will continue to have duties under Section 4 of the Act, which places a duty on those who provide non-domestic premises in a workplace, such as landlords. The duties that the self-employed person will have more generally will depend on whether the self-employed person carries out the activities on the proscribed list.

[Lord Deben]

My question was not just about whether they had duties, but whether the same responsibilities for the self-employed person who was exempt would be borne by the owner of the premises upon which they were working.

[Lord Wallace of Saltaire]

My Lords, I will have to write to the noble Lord about that specific question; I have noted it.

Part of what we are seeing in the rise of self-employment is that the number of people working in their own homes is rising as well; computerisation and all of the information technology developments make that much easier than it was 20 years ago. The noble Lord, Lord Deben, has remarked that inspectors could indeed come around and make sure that they have got their computer screens at the right angle and that they are using the right sort of chair. All of these can indeed be regarded as mild risks to those who are engaged in the activity. Again, however, in the balance between risk and regulation, that seems an acceptable risk to the Government, and one would wish to maintain the degree of independence and autonomy that one could have.

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[Lord Wallace of Saltaire]

If that person is not self-employed, but working in paid employment with equipment provided by the employer, we are in different circumstances from those covered by this clause. If necessary I will write to the noble Lord to clarify that further. However, where a non-self-employed person is working from home while still carrying on their employment is a different circumstance.

The noble Lord, Lord McKenzie of Luton, touched on the list of exemptions and what areas are covered. The regulations will of course be discussed further—the HSE is currently discussing the draft list—so we may come to a slightly different conclusion at the end. I merely wish to point out that the actions of independent van drivers, for example, are covered by a whole range of other regulations. The question of whether we should duplicate regulations and restrictions is also one of those which the Red Tape Challenge wishes to address. I hope that I have managed to answer all the questions that were raised.

[Lord Deben]

I raised the question of information. Although a large number of individuals are exempt—I quite agree with that—they would still perhaps benefit from knowing about these things. How will that connection be made?

[Lord Wallace of Saltaire]

My Lords, I suspect that most young, self-employed people get their information about these things off the computer or iPad. I hesitate to suggest that inspectors should visit them in their homes to check that they are doing things correctly. That suggests a level of state intervention in personal lives and activities that I hope the noble Lord would be strongly opposed to and perhaps the Labour Front Bench would not wish to propose. As I have stressed before, we are talking about the balance between acceptable risk and necessary regulation, and about the balance between the burden of regulation and the perception by people who wish to set up their own businesses or work on their own of the amount of regulation they face and the potential risks to themselves and others who may visit them.

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[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.