House of Commons Hansard Debates for 4 Nov 1999 (pt 1)

1. Mr. Desmond Swayne (New Forest, West): When he plans to respond to the consultation document, "Regulation of the Private Recruitment Industry". [95822]

The Minister for Competitiveness (Mr. Alan Johnson): We will respond once we have fully considered all the representations received.

Mr. Swayne: The Department's regulatory impact assessment gives little indication of the compliance cost of the proposals, because the Department says that it cannot calculate the extent to which behaviour will change as a result of them. Behaviour will change because elderly and vulnerable people will be unable to afford the cost of care in the home. The VAT element of the proposals alone will add £1 an hour to that cost. What is the benefit to public policy of charging that to elderly people in order to raise £40 billion a year for the Chancellor's burgeoning general election war chest?

Mr. Johnson: The consultation documents that we published in May have been well received by everyone involved with the employment agency business, for instance, those concerned with health care, such as Age Concern and the United Kingdom Association of Home Care Workers. The review is designed to promote labour market flexibility and protect elderly and infirm people where there is ambiguity about whether their carer works for the agency or for the hirer.

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We shall not be awarding any Dan Dare badges to the hon. Gentleman for pointing out that there are VAT implications. That was stated clearly in our document and we are working closely with the Treasury to resolve those problems during the consultation period.

Dr. Vincent Cable (Twickenham): Would the Minister acknowledge that he has received some strong negative representations about the proposals' impact as they relate to temp-to-perm fees? Does he agree that, if this regulation goes through in its current form, it could do serious damage to people who wish to enter the labour force on a flexible basis, particularly women returning to work and people from disadvantaged groups? Will he give a categorical assurance that, once the regulation is published, he will have a further round of consultation with those most likely to be affected by it?

Mr. Johnson: We pointed out clearly that we do not seek to end the practice of temp-to-perm; we seek to end the situation where an individual who works for a company is prevented from being hired as a permanent employee by arrangements that have been condemned by many in the industry. We seek to end restrictive practices among employment agencies, and that has been widely welcomed.

Mr. Nick Gibb (Bognor Regis and Littlehampton): I welcome the Minister to his first Question Time and congratulate him on his appointment. Does he realise that the proposal to introduce restrictive regulations on temp-to-perm fees charged by employment agencies, and the proposal to charge VAT on all a temporary workers' wages rather than just the agency fee element, are hugely damaging, bureaucratic and interfering? Is not that yet another example of the Government saying one thing to business about lightening the burden of regulation, but doing the opposite and introducing huge swathes of new, burdensome regulation on British business?

Mr. Johnson: I thank the hon. Gentleman for welcoming me to the Dispatch Box. He has got this matter wrong. Age Concern has made the position absolutely clear in its submission, which stated:

"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 . . . wholeheartedly supports these changes."

The simple truth is that if we did not change the regulations that have been in place for 26 years, we would leave the most vulnerable people--the elderly and infirm--in a position where, as Age Concern recognises, they would be responsible not just for employment law but for tax law and the health and safety of the people caring for them. That is why the changes are necessary and why we intend to carry them through.

Enterprise Challenge Centres

2. Mr. Huw Edwards (Monmouth): If he will make a statement on progress in establishing enterprise challenge centres in universities. [95823]

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The Secretary of State for Trade and Industry (Mr. Stephen Byers): We have recently announced the establishment of eight centres of enterprise in the university sector at a cost of £25 million. The centres will promote the exploitation of knowledge and will make a major contribution to the development of an enterprise culture in the UK.

Mr. Edwards: Can my right hon. Friend tell the House where the centres are to be located and how they complement other initiatives introduced by the Government to bring science and enterprise together?

Mr. Byers: I am grateful to my hon. Friend for his question, because I can now prove that there are eight centres: at Bristol, Cambridge, Glasgow, Imperial College London, Manchester, Nottingham, Sheffield and the London business school.

Mr. Nick Gibb (Bognor Regis and Littlehampton): That is seven.

Mr. Byers: No, there are eight--I just checked.

Those centres will have a wider regional focus, looking not just at the needs of their own cities but at those of their whole region. The objective of the new centres of excellence is to ensure that we can exploit commercially the knowledge that resides in our university sector, which was badly neglected during the 18 years of the previous Administration. We shall provide £25 million to ensure that we can use that knowledge to create British jobs and British investment for British people.

Mr. Michael Fabricant (Lichfield): Does the Secretary of State agree that one of the roles of those enterprise centres is to seek partnerships with people outside universities in knowledge-based industries? Why did he not make representations to the Chancellor of the Exchequer and the Secretary of State for Social Security to prevent the regulations on IR35 from going through? I have received--as, I am sure, have many hon. Members--representations from many people in the knowledge-based industry. [Hon. Members: "How many?"] I have received 2,600 representations from people saying that they will leave the United Kingdom or will invoice from outside the UK, because they cannot survive with the IR35 regulation. Does the Secretary of State accept that, without the writing of software, there is no e-commerce and there is no knowledge-based industry?

Mr. Byers: The hon. Gentleman has learned nothing from his party's 1997 election defeat. The Tories are yet again defending a tax loophole. We have heard it all before, and we are hearing it again today. The Government consulted widely on the changes that the House voted in favour of last night. As a result, we were able to close a tax loophole with the support of the industry. That is what our proposals do, and that is why the House agreed to them yesterday evening.

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