Growth and Infrastructure Bill

Lord King of Bridgwater Excerpts

Wednesday 20th March 2013 Lords Chamber

[Lord King of Bridgwater]

My Lords, I am delighted to follow my own Bishop, who represents a city in which for a considerable number of years I had the privilege to work in industry and to have considerable responsibilities for employment and factory management. I have found this experience extremely valuable in addressing some of the issues that are before your Lordships’ House.

As my noble friend may know, and as the noble Lord, Lord McKenzie, will know, I was very robust yesterday in supporting the Government’s main programme to restore our economic strength. Today, however, I have to say that I regret the approach which the Government are taking. I am a very strong supporter of employee share ownership. Indeed, the great company in which I worked in Bristol was exactly like John Lewis, and every single employee enjoyed substantial bonus arrangements at the end of the year in a profit share. It is a valuable way of building up employee relations throughout any workplace.

I recognise the real challenges for employers at the current time, the complexity of legislation as it has increased and the need to try to make sure that the legislation that we pass, often with the best of intentions, does not become a substantial block to employment. For example, I welcome the fact that the exemption period for the unfair dismissal arrangements has been changed from one year to two years. However, that is where my support stops. My noble friend will know my views on this because I made them very clear to him. I express my appreciation for the very courteous and diligent way in which he sought to respond to a number of the points that I and others have made. I am sorry, for reasons which I will give, that the Government have got us into this position.

I think that it was Field Marshal Lord Alanbrooke who said that Winston Churchill used to have some wonderful ideas and some very stupid ones as well, and that his job was to determine which was which and make sure that the former were pursued and the latter quickly dropped. When I had some responsibility for the reform of employment law under the noble Baroness, Lady Thatcher, a number of people came to me who fitted exactly into that category of having some very good ideas and some pretty stupid ones as well, and one had to try to distinguish between them.

As soon as I heard the announcement of this proposal and of the brief period of consultation which would take place on it—and I understand that 92% of those who responded to the consultation were against the proposal—I carried out my own consultation. I have not found anybody yet who is in favour of the proposal or who says that they think that they will use the provision. I accept that the noble Lord, Lord Flight, has a good point, because he has huge experience of the City of London. I can see that very bright people, anxious to be successful and to enjoy good financial reward, and who are confident in their own judgment, might be prepared to embark on this course. However, if one then looks at the generality of SMEs and at the range of industry and employees up and down the country, one sees that the balance is completely wrong.

The power is with the employer at a time when many young people are finding it hard to get jobs. In no way is it a fair balance to say, “You have an impartial opportunity to decide”. I just wonder what will happen to the poor job applicant who, when he is told what the terms are, says, “I will now go and consult my adviser”. In relation to the earlier amendment we discussed the complexity of the tax arrangements which might apply and the complexity around the type of stock being offered—whether it is stock that cannot subsequently be sold. Given the overall complexity of this, is it a fair arrangement that an applicant for a job can be told that he can either take the job on this basis or not take it? I know exactly what the employer will say—“Well, do you want the job or don’t you?”. With a queue of 25 waiting outside, nobody can be happy.

I am trying to say as forcefully as I can that I am a strong supporter of the Government. I hate standing up here in the presence of all your Lordships to criticise something, but I have a greater duty to the Government—to prevent them going down a track which would lead to some really unhappy consequences. The opportunity provided by Clause 27 could be used by some very dubious employers indeed, and a large number of their employees could be deprived of their employment rights. If that happens there will be a feast for lawyers. With the greatest of respect to the noble Lord, Lord Pannick, he will do himself out of some work if this clause is omitted, because lawyers would have a field day.

With the opprobrium that could return to the Government as a result of this proposal, my duty is to give to my noble friend and the Government the best advice that I can from my own experience. I cannot support this clause. It is not at all the right way to go forward. I strongly support any sensible measures to help employers, and I welcome and congratulate the Government on the significant increase in private sector employment, but I say to them: do not pursue this route; it is the wrong way to go.

[The Earl of Erroll]

My Lords, I will make a couple of quick points on this. I keep hearing this tale about how power lies with the employers. Noble Lords talk about large companies that have expensive and well staffed HR departments and lawyers who work on this full time. I am afraid that the SME world that I live in a lot of the time is not like that. There, you cannot afford it. When you employ one, two, three, four or even up to 25 people, you cannot afford expensive HR advice every time you twitch, move, open your mouth or anything. That is what we have got down to because people say that the power lies with the employer. It does not.

We are seeing more and more vexatious demands over discrimination. In employment law, cases of sex, race, disability and age discrimination immediately mean unlimited liability. That means that your house and everything goes. If you are not a company—you may be a sole trader as a small employer—you will lose everything and be out in the street. Everything will be taken from you. If you incorporate, you are now told you are doing it for tax avoidance or evasion purposes and the press have a go at you for that instead. So in what way are you supposed to protect yourself?

The power may lie with the large employers. I do not know. I am not in that rich and rarefied world of some of the Silks who sit here and can afford that. As a small businessman I, and people like me, cannot afford the noble Lord, Lord Pannick. It would be wonderful if we could because we might get some protection as employers. For once, he might not represent the employee. I fear that it would normally be the other way round and we know who would win when someone was confronted with his incisive way of thinking.

All I want to tell noble Lords is that the world is not how some people see it. There are everyday problems out there and they limit employment. At the moment, half the people in the country are employed by microbusinesses and small and medium-sized enterprises of up to 250 people—there are very few in the bracket above 25 to 40 and below 250. Those are the people who need protection from a lot of this and we are not giving that in employment law as it stands today. Whatever noble Lords say, it is not there.

The charity world is another case. I know a charity that needed to rejig some things and wanted to bring in someone with greater expertise. It therefore needed another someone to move on to something else. It thought that it had reached a compromise agreement with him but then this chap did not sign it. When it came to the point of the tenth or eleventh month, when the charity thought it was all about to happen, he said, “I have not signed it yet and I have just gone to see some lawyers”. He is now trying to plead all the discriminations. I cannot see how he can, and nor can anyone else, but the cost of fighting that will be phenomenal. The fear of everyone, particularly the trustees of the charity—who are terrified—is their exposed position if he wins because the case can be proceeded against them. That is the bit that noble Lords forget about. They live in a dream world where we have a fair legal system, tribunals think fairly and lawyers always act in the best interests of law and not of these people. It is not like that. Therefore, I would like to see Clause 27 come in so that at least some people might negotiate a different arrangement. It is there for small businesses not large ones.