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Rob Marris: Of course running a small business is hard. I have helped to do so in my time, as the hon. Gentleman may have. Given that the burden he has just mentioned may fall disproportionately on small business, however, why does he apparently support new clause 3, which refers to an average reimbursement?

Mr. Prisk: New clause 3 is intended to provide for a clear assessment of the costs and benefits for all concerned. Without that, as my hon. Friend the Member for Tatton (Mr. Osborne) pointed out, we shall be flying blind. New clause 3 seeks to ensure that we know the costs, and indeed the potential benefits, so that we can be fair to all parties. New clauses 1 and 3 attempt to identify a problem accurately; they also reinforce the spirit of National Audit Office guidance to Ministers on how regulatory impact assessments should be compiled. The Minister may wish to consider that important aspect.

All that the three new clauses aim to do is provide an informed assessment of the Bill's impact on those whom it will affect. Although I have grave reservations about the costs to family businesses and other small firms, I think that new clause 1 will allow us to have an informed and intelligent debate.

Mr. Simmonds: I too support the new clauses. The Bill contains much that is good, particularly the clauses allowing parents flexible working hours when that is

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appropriate and providing for paternity and extended maternity leave. Having run a small business, however, I believe that they will place additional burdens on such businesses.

I think we all accept that allowing more rights and greater flexibility in the workplace, where appropriate, is sensible and forward-looking. As my hon. Friends have said, however, the Government must understand that there is a cost to businesses. I am particularly concerned with the cost to small businesses. The provision of dispute resolution and grievance procedures are most likely to have an impact, mostly because they are less likely to have existing procedures from which to develop. According to the regulatory impact study, the total recurring cost—I am not talking about one-off costs—will be up to £610 million.

That extra money must come from somewhere. In the case of small businesses in particular, it can be found in only three ways. It may come from profits, which means that there is less money to reinvest in the business, thus enabling it to grow and making future jobs possible. It may come from a cut in employment. Some businesses living on the margin will not be able to cope with the additional regulatory burden, or with the extra administration and costs. Those businesses will disappear.

Mr. Mark Field: My hon. Friend the Member for Hertford and Stortford (Mr. Prisk) made a good point. There will now be two sorts of employee, those who will benefit and those who are employers in small businesses. The latter will bear a double burden: they may have family commitments, while incurring large costs in terms of both money and time that will not even be included in the £610 million mentioned by my hon. Friend the Member for Boston and Skegness (Mr. Simmonds).

6 pm

Mr. Simmonds: My hon. Friend makes a sound point. There is a paradox here in that one of the Bill's underlying themes is to create more family friendly policies so that more time can be spent with children. Yet there may be a direct impact, with those who own and run small businesses being able to spend less time with their families because of filling in forms and dealing with the administration and additional regulatory burdens imposed by the Bill.

It is my view that £610 million is an underestimate. The extension of union learning representatives will have a significant impact on small and large businesses. Furthermore, enormous additional costs could be imposed under the regulations. New clauses 1 and 3 should be considered carefully, otherwise we will have no idea of the costs for businesses.

It would be strange if the Department of Trade and Industry carried out no assessments and had no monitoring structures to ensure that these provisions did not have a detrimental impact on businesses, small and large. I hope that when he responds, the Minister will say that monitoring structures will be put in place. If not, how on earth will the Minister and his colleagues be able to judge whether the legislation has been a success? The only way in which the hon. Gentleman will be able to tell whether the Bill has been a success is if fewer cases go

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to employment tribunals, and he has already said that that will not be the case. He must consider the new clauses carefully, as they will ensure the Bill's success.

Many small businesses struggle to survive. It is only by the hard work and dedication of those who run them that they can thrive in a highly competitive economic situation. The new weight of red tape to be placed on employers needs to be assessed. It is my view, as I stated in Committee, that small businesses with fewer than a certain number of employees should primarily be exempt from certain aspects of the Bill. It is my belief that certain measures will be so detrimental to small businesses and their ability to create employment, grow and drive the economy forward that the voluntary arrangements that are in place and have been thriving in the past should be allowed to continue.

My view is supported by the Forum of Private Business, which says:

It is not unreasonable for new clauses 1 and 3 to require the Government to report back to the House with a detailed assessment of the Bill's impact. Further burdens are already borne by business, such as the processing of loans and administration of benefits. Those are matters for which the Government are responsible. Fulfilling those tasks takes up valuable management time and distracts from the focus of what management or owners are supposed to do in running small and medium-sized businesses. I hope that that work will be clarified in the Carter review and that it will give recognition to those who run small businesses.

The burden of regulation on business has greatly increased under this Government. The one theme that runs through the remarks of all the business men and women I meet is that we must reduce red tape. I plead with the Minister: if the Bill goes through, a line must be drawn in the sand. There must be no more additional regulations and burdens placed on businesses, particularly small businesses, which will lead to a further reduction in competitiveness.

Alan Johnson: The new clauses would impose a regime of evaluation of the measures in the Bill that is both costly and unnecessary. New clause 1 requires an annual report of the impact of these measures. New clause 3 requires an assessment of the average cost to business per employee of administering each measure in the Bill and proposes that those costs be reimbursed from the public purse. New clause 4 seeks an assessment of the additional resources likely to be required by the Advisory, Conciliation and Arbitration Service before the measures in parts 2 and 3 of the Bill come into force.

Let me make it clear that I entirely agree about the importance of effective evaluation policy. We have already provided details of our proposals—they are included in the regulatory impact assessment—to evaluate the impact of the separate provisions in the Bill. That assessment, as hon. Members are aware, is available in the Library. It makes it clear that individual policies will be evaluated effectively. For example, we have accepted the recommendation of Professor Sir George Bain's work and the parents taskforce. That taskforce had

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representation from the CBI, and the splendid Simon Topham, a small business man, and other small business representatives contributed to the nine unanimous recommendations. One recommendation is about taking a baseline survey on current practice on flexible working later this year, with a repeat study, three years later, to measure the effect of the legislation.

We have taken account of the possible costs to ACAS arising from the implementation of parts 2 and 3 of the Bill and we have assessed the impact on employers of administering the maternity and paternity pay policies.

Mr. Hammond: The Minister said that the proposals in the new clauses were costly and then went on to say that he intends to carry out precisely the evaluations that we propose. How are his evaluations not costly while the ones proposed in the new clauses would be?

Alan Johnson: I will be coming to that.

On flexible working, the specific recommendation from the Bain taskforce was that in such a brave new world, as Conservative Members have said, there was no precedent and that, as we had scant information, we should take measures now because the provisions to set a proper baseline against which to evaluate those procedures will not apply until 2003. Accepting a recommendation to conduct such surveys does not mean that we will accept every proposal to conduct surveys and reconsider costs, as proposed in the new clauses.

I shall say more about ACAS in a moment. Evaluation is important, but it cannot be produced out of a hat. Immediate impact assessment is often of limited value, as I admitted in Committee. It takes time for evidence to emerge, and it is not always possible to separate the effects of legislation from other changes taking place in individual businesses.

Conservative Members must decide which way they want to play this. On the one hand, there is a kind of "Letwinisation" that says that these measures are part of a good society and that people should have adoption and paternity leave. On the other hand, there is the old and rather tired view. I pay tribute, however, to the hon. Member for Runnymede and Weybridge (Mr. Hammond), who accepted that there were benefits to society but put the fascinating and quite new argument that society should pay for them. They cannot have it both ways.

The Bill introduces measures that are long overdue. It is ludicrous that adoptive parents have received no help in the past. It is ludicrous that, despite having for 20 years been part of a World Health Organisation drive to encourage mothers to breast feed their children up to six months, we have done nothing about it. It is ludicrous that so many workplaces and workers have no recourse to internal procedures for resolving disputes and grievances.

These matters must be tackled. Each new clause refers to the cost of a measure for employers and the public purse, but none of them refers to the benefits. I am pleased that some of my hon. Friends talked about the benefits. The family friendly policies, the improved dispute resolution, the modernisation of the tribunal system and the other policies in the Bill are designed to create modern productive workplaces that provide the partnership and flexibility that both employers and employees seek to strengthen business competitiveness.

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