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Mr. Deputy Speaker: Order. I hope that the hon. Gentleman will not attempt to stretch his memory. Under new clause 1, we are discussing the Bill's impact, and he need not stray outside it.
Mr. Hammond: Thank you, Mr. Deputy Speaker. The point that I am trying to make is that the burdens that will be imposed under the Bill are, of course, incremental. I do not suggest that this Bill alone will be the downfall of British industry. That would be absurd, but the Bill has to be seen in the context of business—in particular, the manufacturing sector—facing extraordinary difficulties because a raft of new burdens, new taxes, new regulations and new legislation has been imposed on it since 1997. We are staring down a pipeline that contains a further vast array of legislation and regulations—which largely originate in Brussels—and that will descend on British business in the not-too-distant future. That is the last thing that business needs at this point in time.
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Judy Mallaber (Amber Valley): If the hon. Gentleman is able to talk only about the burdens imposed by this Bill, would he care to tell us which parts of the Bill, other than the provisions for union learning representatives, a proposal with which we know he disagrees, he would get rid of? Would he get rid of the paternity provisions and the adoption provisions? Will he let us know exactly which parts of the Bill he wishes to dispose of?
Mr. Hammond: The hon. Lady has perhaps missed the point of new clause 1. We must be honest with ourselves in recognising that all the good things in part 1 will impose costs on business. The next thing I was going to say was that I do not know exactly how damaging those costs will be to business. However, anybody who cares about our economy, growth, jobs and prosperity will want to ensure that we monitor carefully the impact of the legislation passed by the House. Regulatory impact assessments are prepared for Bills considered by the House. However, once we have passed them, off they go.
New clause 1 suggests that the Secretary of State should attempt to measure annually what the cost impact of the measures in this Bill has been, and continues to be,
on business. That would enable us to have an informed debate about the costs and benefits, and also about the incidence of those costs and benefits. It is not a question only of the costs imposed on businesses, but of the costs imposed on other employees in the workplace.The Bill has a particular focus on dealing with employees who have young children. However, if we accept the premise that business has a limited capacity to absorb additional burdens and remain competitive, we are selecting one group of employees for favourable treatment against other groups of employees who believe that they have claims for similarly favourable treatment. Of course, parents of young children can make a strong argument for a right to ask for flexible working, and strong arguments can be made for granting paternity leave to help strengthen families at the time of a birth. However, other employees look after elderly relatives, and in many cases they spare the state a very expensive burden. We should also consider employees who look after adults with disabilities.
Many employers attempt to be even-handed and flexible in dealing with their employees and their requests for flexible working or periods for time off. The fear must be that if one group of employees is given an absolute statutory right to ask for flexible working and to have that application considered by an employer who has to provide reasoned arguments if he will not grant the request, the natural reaction of employers will be to resist granting such extra statutory rights to other employees who are not entitled to them under the law. Therefore, a cost will be imposed on other employees in the workplace because of the real benefits being extended to a particular group of employees.
Mr. Kevan Jones: Does the hon. Gentleman agree that there is also a benefit to business and industry if parents do not have to worry about having to get time off to look after young children? Productivity may increase. Companies that have invested in training and other matters and that allow women, in particular, to work flexibly could therefore retain them in the work force.
Mr. Hammond: The hon. Gentleman is absolutely right. In many cases, particularly in areas where the labour market is tight, employers will take the kind of measures that we are discussing entirely for reasons of self-interest. I do not disagree with that for a moment. I do, however, take issue with the suggestion that we should get into the business of Governments using legislation to force employers to do things because they are good for them. In general, the Government's record in second-guessing the best way to run a business is not top quartile. If courses of action are available to a business which a rational manager might take for himself, that should be left to education rather than legislation to determine. Frankly, I would not trust the Government to impose the best management course of action in legislation.
Mark Tami (Alyn and Deeside): The hon. Gentleman talks about forcing employers to act. How does he square the re-authorisation of trade union membership with that?
Mr. Hammond: I am not sure that I follow the hon. Gentleman.
Mark Tami: I refer to check-off, which the previous Government forced employers to carry out every three years.
Mr. Deputy Speaker: Order. I sense that the hon. Member for Runnymede and Weybridge (Mr. Hammond) is being led out of the confines of the new clause. It might be best if he does not pursue that argument.
Mr. Hammond: I am grateful for that ruling, Mr. Deputy Speaker. I shall plead ignorance in line with a sedentary comment from my hon. Friend the Member for Tatton (Mr. Osborne) who also thinks that Chekhov is a playwright.
It is not clear that the proposed measures will help UK business in the struggle to maintain productivity in the face of competition from overseas and the black economy, which we discussed in Committee. That touches on what the hon. Gentleman said. It is also worth remembering that every time we impose more legislative burdens on business, we widen the competitive advantage enjoyed by those who operate in the black economy and increase their ability to undercut responsible firms that abide by legislation, good or bad, that we introduce.
Costs that are borne by business will have to be absorbed in their total labour cost. The cost to a business of treating one employee will inevitably reduce what should be available to other employees as wages. Those employees who do not benefit from the costs that are imposed on business will be cross-subsidising their colleagues in the workplace. I am not suggesting that it is necessarily wrong to introduce such measures, many of which we welcome, but it is wrong to pretend that they do not have a cost to business, the economy and fellow employees. We have introduced new clause 1 to focus on that cost and to find a mechanism for regularly reviewing and assessing its level.
New clause 3 is supplementary to the purpose of new clause 1. It requires the Secretary of State to focus on the administrative cost to business of implementing the measures and to provide for reimbursement from public funds for that. Businesses are increasingly being asked to perform a role that was previously carried out by the state, especially in relation to administering the welfare state. The burdens are being imposed not just for the benefit of business itself but for the wider benefit of society, and they should be paid for by the public through taxation.
The Minister and the Secretary of State were keen to emphasise on Second Reading that small businesses at least will be reimbursed for 100 per cent. of their direct costs in dealing with maternity pay, paternity pay, adoption pay and so on. That is right, although it does not extend to all businesses. However, there is also a significant indirect cost to businesses. We do not know the size of the cost, but the best guide that we have is in the regulatory impact assessment. New clause 3 would provide a mechanism for regularly assessing that cost and arranging for it to be picked up by the public purse.
I understand that the Carter review of the cost to business of payroll compliance is under way. Perhaps the Minister will tell the House about the progress of that review, or perhaps it is a state secret that will be revealed by the Chancellor on Budget day. Many small businesses
place a great deal of hope on the outcome of the review. They hope it will lead to a recognition by the Government that as businesses are being asked to do more and more of the state's administrative work in relation to employees, their costs must be reimbursed. Businesses may well be an efficient means of delivering services because they are geared up to administering the work of the welfare state and delivering benefits to employees, but they must be reimbursed.New clause 4 deals with the resourcing of the Advisory, Conciliation and Arbitration Service. The original scheme for tribunal reform considered by the Government was intended to generate revenue through a system of fees. Under pressure, the Government scrapped that system. Until this evening, I had thought that parts 2 and 3 were intended to reduce the work load of tribunals, so I was a little surprised to hear the Minister say he thought it likely—indeed, I think he said inevitable—that the work load would increase. That makes new clause 4 doubly important because it deals with the adequate resourcing of ACAS in fulfilling its responsibilities under the Bill.
It is apparent to everyone that if the Bill is successful in reducing the burden on tribunals by diverting cases away, an additional burden may fall on ACAS. We probed the Minister on this matter but did not get a satisfactory answer. The new clause would require the Secretary of State to undertake a formal assessment of the resourcing requirements of ACAS before implementing parts 2 and 3. One of the many matters on which Members on both sides of the House have agreed during the proceedings on the Bill is that ACAS has a vital role, and it is essential that it is properly resourced to perform that role.
In Committee, we merrily talked about conciliation officers being available for this, that and the other, but ACAS is already under great pressure. Whether the work load of tribunals increases or, with a greater number of cases being handled outside the tribunal system, substantially decreases, there is likely to be a significant increase in the demand for ACAS services. I hope that the Minister will enlighten us as to what his Department envisages for the future adequate resourcing of ACAS. How can we ensure that this will not be a half-baked measure and that parts 2 and 3 will not come into force without ACAS having been given sufficient resources to cope with the responsibility placed on it by the Bill?
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