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Mr. George Osborne: The Minister was careful in the way he put his estimate. He said that he hoped to reduce by some 30,000 to 40,000 the number of cases that would otherwise have gone to an employment tribunal, but he did not say that he hoped for an absolute reduction in the

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number of cases going to employment tribunals. Given that other provisions in the Bill, such as flexible working rights, may lead to an increase in cases going to employment tribunals, can he clarify whether he hopes to see an absolute reduction in the number of cases going to employment tribunals, and by how much?

Alan Johnson: As I said on Report, people are more aware of their rights now, which is healthy. They have more rights to be aware of.

Mr. Prisk: Absolutely.

Alan Johnson: Indeed, but it is not absolute. Given that we are committed to tackling discrimination on the grounds of age, disability, religion and sexual orientation, it would be crazy for me to predict an absolute fall in employment tribunal cases. I picked my words very carefully. Of the disputes that might go to employment tribunals, about 30,000 to 40,000 can be settled outside, and I think that that is a worthy ambition.

My hon. Friend the Member for Stoke-on-Trent, North (Ms Walley) expressed her concerns eloquently. I recognise that she has long been concerned about the £10,000 costs award. Of course, awards could go as high as £10,000 before, but it needed a separate court order and could not be done at the employment tribunal.

My hon. Friend asked how we will gauge or monitor the situation in relation to the introduction of the £10,000 award last July. That was last July—a year ago today—so we have 12 months' worth of information. We are expecting to begin a study of the employment tribunal cost regime in the next year, and we will look very closely at the result. Some evidence has already emerged at the employment tribunal system taskforce, but we will certainly look at it again.

My hon. Friend also spoke about ability to pay, which is the other important issue in this group of amendments. We made it a discretion rather than a requirement in order to restore the status quo. It was always a discretion, not a requirement, until the time of the Court of Appeal case. We did not make it a requirement because, as I said earlier, there could be circumstances in which someone of limited means knew that they had absolute indemnity to raise these cases. We believe that the discretion should be placed with the tribunal. The hon. Member for Runnymede and Weybridge asked whether that should be a principal consideration. We are not saying that, but the employment tribunal should have the ability—the discretion—to make a full award, no award or a reduced award. We are simply returning to the previous situation.

Ms Walley: In view of what my hon. Friend has just said, does he anticipate issuing guidance to employment tribunal chairmen on how the discretion is to be applied, following the decision of the Court of Appeal?

Alan Johnson: We will certainly issue guidance and it will be part of the regulations. However, the judiciary and the employment tribunal chairs will be very familiar with the regime, as it existed until just a few months ago, following the Court of Appeal decision. I do not think that there will be any problems there.

Mr. Hammond: I sense that the Minister is coming towards the end of his remarks. Have the Government any

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evidence to suggest that the total sum of costs is higher in cases where both internal and external resources have been brought to bear, compared with those where the matter has been dealt with entirely by an external law firm or in-house? If not, I do not believe that he has made the case for refusing to recognise a mixed base of costs.

Alan Johnson: No, I do not have that evidence, but we know that the average award over the past year has been £300. There is a big gap between £300 and £10,000. That suggests three things: there are not many of these cases; tribunals take into account ability to pay; and the fact that the award is only £300 but could go as high as £10,000 is part of the fear factor about which we hear time and again from people who deal with these cases day in, day out. The hon. Gentleman made a valid point and his argument is logical. We considered the establishment of a mixed system but were persuaded to move away from it—hence the amendment.

My hon. Friend the Member for Manchester, Central (Mr. Lloyd) pointed out that we were not dissuading people from going to employment tribunals. I said that earlier—as I have on other occasions—and I am happy to repeat it: we are not about denying people justice. To be fair to the Opposition—certainly those Members who sat on the Committee—I do not think that was their objective either.

My hon. Friend the Member for Wolverhampton, South-West asked, first, whether the provision would apply to the employment appeal tribunal. There is no provision for preparation time in the tribunal, although there is provision for litigants in person, so we need to apply the provision either for preparation or legal costs.

My hon. Friend's second point—

Rob Marris rose

Alan Johnson: If my hon. Friend wants to intervene, perhaps he could remind me of his second question.

Rob Marris: My point referred to page 33 of the Bill and the revised section 34 of the Employment Tribunals Act 1996, which states:

Expenses are different from preparation time—they relate to the cost of a witness attending a tribunal hearing or, in this case, an appeal tribunal. Given that on page 32 there is a reference to costs and expenses, I wanted to ensure that no problem would arise. It might help those in the judicial system who have to interpret the measure if the Minister could give some clarification.

Mr. Hammond: I may be mistaken but my recollection of our discussions in Committee is that the word "expenses" relates to Scotland. Is that correct? The hon. Gentleman is a lawyer, so he may be able to assist us.

Rob Marris: A Scottish lawyer.

Alan Johnson: The hon. Member for Runnymede and Weybridge helps me enormously. As I said, there is no preparation time in the EAT and the Scottish term for costs is indeed expenses.

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On that note, I hope that the House will support the motion.

Lords amendment agreed to.

Lords amendments Nos. 27 to 30 agreed to.

Clause 24


Lords amendment: No. 31.

Alan Johnson: I beg to move, That this House agrees with the Lords in the said amendment.

Mr. Deputy Speaker: With this it will be convenient to consider Lords amendments Nos. 32, 33, 78, 80 and 91.

Alan Johnson: Amendment No. 31 deletes subsection (3)(a). It is a minor amendment that relates to the processing of tribunal claims between the Employment Tribunals Service and ACAS. Our intention was to provide through regulation a circumstance where uncontested applications would not be passed to ACAS, so that its resources could be better focused on applications where both parties acknowledged the dispute.

As a result of debates in the other place, however, it became clear that valuable conciliation time could be lost if, rather than sending an application to ACAS immediately, we waited to find out whether the respondent would contest it. The consequence would be a delay before ACAS could begin work and thus a delay to the processing of claims, which is not in the best interests of tribunal users. We believe that the overall user interest should take priority over a small saving of ACAS's time and that, on balance, subsection (3)(a) is undesirable. Accordingly, we drafted amendment No. 31 to delete it.

The amendment will have the effect that an originating application to an employment tribunal that falls within the duty of ACAS to conciliate will continue to be sent to ACAS immediately. The same applies to notices of appearance.

Lords amendments Nos. 32 and 33 are technical and consequential on Lords amendment No. 31. Lords amendments Nos. 79, 80 and 91 are also technical and consequential on the removal of section 19(c) of the Employment Tribunals Act 1996, which is affected by clause 24(3)(b). I commend these amendments to the House.

5.45 pm

Mr. Hammond: The essential point is that Lords amendment No. 31 will remove the discretion to create exceptions by regulation. As the Minister will know, we are always delighted when the scope for discretion by regulation is reduced—something for which we always argue in Committee. It is interesting that the Government appear to have been more readily persuaded of the merits of removing such discretion in the other place. I wonder whether that has something do to with the simple arithmetic that prevails there.

I am pleased to say that we are delighted with the Lords amendment, which will improve the Bill. I wish that the Minister were able to tell us that many similar amendments would remove such discretion in regulations, but sadly this is the only such change.

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Lords amendment agreed to.

Lords amendments Nos. 32 and 33 agreed to.

Clause 28

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