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2.12 pm

The Parliamentary Under-Secretary of State for Trade and Industry (Mr. Alan Johnson): I commend the hon. Member for Sutton and Cheam (Mr. Burstow) on securing this Adjournment debate. He has taken a keen interest in this subject, as have other hon. Members. It is an important subject, and I welcome the debate, not least because it gives the Government an opportunity to state clearly what the review is about. We have had genuine consultation, and have welcomed the positive dialogue that we have had with the recruitment industry and others. We are carefully considering the responses that we have received, and we have made it clear that nothing has been set in stone, concrete, aspic or any other substance. The debate therefore comes at an opportune time.

The private recruitment industry plays a key role in today's flexible labour market. It is a major industry, and covers permanent placements and temporary staff hire in diverse sectors, from office work to factories, from entertainment to the care of the elderly, which was the issue on which the hon. Gentleman concentrated.

The industry has tripled since 1992, and its turnover is now estimated at more than £16 billion. The regulations governing agency conduct are 23-years-old. It is widely accepted that the private recruitment industry has expanded and developed so much since then that we need to update the regulations.

We have received widespread support from employment bureaux, trade organisations, hirers and workers for the aims of our new regulations. The problem with the contribution of the hon. Member for Sutton and Cheam is that it tended to give an unbalanced view of what the review is all about. He mentioned a perverse effect, but talked about one particular aspect.

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It is important to put on record the fact that most of the organisations in the sector have welcomed not just the review, but the broad thrust of the Government's proposals. I amplify that by quoting, for example, Age Concern, which says in its submission to the review:

It goes on to say:

    "Many of the proposed changes are entirely consistent with the broader thrust of Government policy: enhancing the protection of vulnerable people; improving the quality of services; and ensuring minimum standards in employment practice. Age Concern England wholeheartedly supports these changes."

May I take the liberty of mentioning another quotation, which is also important? The hon. Member for Sutton and Cheam mentioned the UKHCA, a major player in the sector. It made it clear that

    "the reforms will radically alter traditional working practices, most particularly in the care sector and, despite concerns over elements of the proposed regulations, agencies do support the basic principles of transparency and improved conditions for care workers."

Mr. Burstow: The Minister has moved on to the point that I wish to draw to his attention. The care sector of that big industry has generally welcomed the regulations, but it has particular concerns, on which I have sought to concentrate my remarks. I look forward to him dealing with the VAT issue, which is at the crux of the sector's concerns.

Mr. Johnson: Be patient. I will come to that, although the hon. Gentleman will recognise that the debate is about our review of the agency sector. For reasons that he mentioned, it is important to put it on record that the broad thrust of the proposals are welcomed. Indeed, if we did nothing and retained the status quo, Elizabeth, the constituent whom he mentioned, would stand to lose a lot and would be in great jeopardy.

It is important to set out, as the hon. Member for Sutton and Cheam did to a point, the review's aims. I do not think that he or his party would disagree with them. I would be surprised if any hon. Members would.

We aim to simplify and to reduce the number of regulations. Far from increasing bureaucracy, we intend to reduce it. There are three sets of different regulations. We are looking to have one set to benefit all agencies. We have not seen any criticism of that objective.

We aim to increase the clarity of contractual relationships in the sector, so that workers and hirers know who is contracting with whom. Again, Age Concern makes an eloquent submission to support that. It is equally concerned about the position of care workers and hirers.

Another principle is to promote labour market flexibility. We are looking also to introduce stringent requirements to check temporary staff who work with children, or the elderly--again, a fundamental update that is overdue. We are looking to protect clients and the general public, to curb payment abuses, which occur, as the hon. Member for Sutton and Cheam will accept, in all strands of the industry, and to safeguard entertainment workers' money. We have those seven fundamental aims.

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Contrary to some of the comments by the hon. Gentleman, I can assure him that, for the past two years--I respond to one of his fundamental questions--there has been close collaboration between the Department of Trade and Industry, Department of Health, Customs and Excise and Her Majesty's Treasury. He asked when that began. It would be stretching it to say 2 May 1997, but we began the process shortly after the general election. The concepts of joined-up government and cross-cutting are important, and nowhere more so than on this issue. In the care sector in particular, there are other Departments and Government objectives involved.

We recognise that many people are concerned about how their long-term care needs or those of their friends or relatives will be met. The Government are looking at the system of funding long-term care to ensure that it is fair and sustainable. We set up a royal commission in 1997 to help with that. My colleagues received the commission's report in March this year. We have already acted on some of the recommendations. For example, we have improved services for carers by allocating £140 million over three years to help to fund more respite care. We are extending direct payments to people aged 65 and over. That has been widely welcomed in the industry. We have also announced our intention to establish a proper commission for care standards as soon as parliamentary time allows so that residential and nursing homes can be inspected by an independent agency.

Mr. Burstow: The Minister referred to worthy Government initiatives, including direct payments, which were started by the previous Administration through a private Member's Bill. However, direct payments will butt against the regulations because of the increased liabilities that will result from the change of employment status of care workers, as I said earlier. The Minister has been talking about clarity--

Mr. Deputy Speaker (Mr. Michael J. Martin): Order. The hon. Gentleman cannot go on too long.

Mr. Johnson: Everyone wants to safeguard direct payments. Age Concern and others have made that clear. The crucial aspect of the debate is the relationship between the hirer and the carer.

My colleagues are giving the commission's proposals on the funding of long-term care the careful consideration that they merit. We want to find a solution that is fair to the individual and to the taxpayer and will stand the test of time.

The Government are fully aware of the need for care services to be affordable and of good quality. We are also aware that a small number of agencies in the care sector offer among the most unsatisfactory and ambiguous business terms in the private recruitment industry. If we are conducting a proper review of the entire agency sector, it would be perverse to leave out a sector that has a large number of abuses. Good quality care will not be encouraged or promoted by such poor business practices.

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As I have already said, one of our main aims is to clarify the contractual relationships between employment bureaux, hirers and temporary workers. We shall require employment bureaux to operate as employment businesses when introducing or supplying temporary workers. The temporary worker's contractual relationship will be with the bureau rather than the hirer.

People who take on the difficult job of providing care are entitled to proper contracts and proper employment rights. A bureau that supplies the carer should be responsible for those elements. Otherwise, the people receiving care could find themselves liable under employment or tax law, even if their carer is labelled self-employed by their bureau.

At the moment, some employment bureaux supply workers on vague contracts that result in no one knowing who is responsible. That is the case for Elizabeth, the hon. Gentleman's constituent. Care recipients may find that, without their knowledge, they are responsible for ensuring that their carer receives the national minimum wage and other employment rights, for their health and safety and for their tax arrangements. Unfortunately, a minority of the care sector has conducted a scare campaign. The danger is that it has unnecessarily alarmed some of the most vulnerable people in our communities--those in need of care--and their families and, of course, the care workers themselves. Lurid stories about huge cost increases do not help anyone.

The hon. Gentleman mentioned Able Community Care, a company that participated in our consultation. I note that The Economist this morning contains an article that probably represents all the worst aspects of the lurid reporting that I mentioned. I am not saying that Able Community Care is responsible for the article. It states that people in need of care will have to leave their homes and be housed in already overstretched hospitals and nursing homes and that the Government will prohibit self-employment in the sector. That is certainly not our aim or objective.

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