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31 Jan 2003 : Column 1156—continued
Mr. Hoban: Yet again, my hon. Friend makes a telling point. It is interesting that paragraph 17 of the explanatory notes to the Bill states:
- "There are no significant public expenditure implications. Making imprisonment available for more health and safety offences is expected to lead to a minimal increase in the prison population."
Mr. Bercow: I am sorry to trouble my hon. Friend unduly, but does he agree that the Bill appears to be flawed on one or the other or both of two counts? Either the Bill is guilty of a lack of transparency or honesty in the intended sentencing policy, because it provides for imprisonment without the intention that effect will be given to that provision; or it is based on a calculation of the likely deterrent value of the new sentences, in which case we need to know on what basis—what evidential yardstick or international comparison—the promoter's confidence about the deterrent effect is founded.
Mr. Hoban: On the first point, the question is: if there is to be a sanction, will it be used? On the second point, if there is no expectation that the Health and Safety Executive will use the sanction, will it ever act as a deterrent? If it is not intended to use the sanction, there will be no deterrent. If it is intended to use it more widely, the financial implications of the Bill for public expenditure are rather greater than the explanatory notes suggest. [Interruption.] The Minister for Work says that we must be kidding. When he replies to the debate, I am sure that he will answer the valid points made by my hon. Friend the Member for Buckingham (Mr. Bercow) about the use and effectiveness of the sanction.
I have devoted most of my speech to discussion of health and safety offences and the punishments that will be brought into effect if the Bill becomes law. Opposition Members have expressed concern about the nature and purpose of the sanctions outlined in clause 1. I am sure that we shall return to that point in Committee, because it is important to ensure that the true purpose and intent of the clause are well known to employers and to the Health and Safety Commission, which will be responsible for putting the Bill into effect if it becomes law.
Mr. Leigh: My hon. Friend speaks for the Conservative party this morning, which traditionally speaks for business. Will he outline what the Bill will cost business, any burdens that it might place on business and whether those on the Conservative Front Bench therefore have anything to say on these subjects?
Mr. Hoban: My hon. Friend is tempting me down a route that even the Government probably have not explored fully—the Bill's impact on business.
Mr. Forth: I might be able to give my hon. Friend some help. He knows, because he studied them closely, that in the explanatory notes, which are a very fertile field of information on the Bill—quite a lot of it rather controversial—item 19 says, incredibly:
- "The Bill will not impose new requirements on business."
Mr. Hoban: My right hon. Friend, with his usual incisive powers in looking at legislation, makes a very valid point. I know, from my own experience of looking at regulatory impact assessments, that often they are incomplete or ill thought-through. If the Government are saying that no such assessment is needed in this case, I do wonder whether they have looked at the matter fully. My right hon. Friend is right: if the Bill is passed, employers will review their procedures. It will provide fertile employment for human resources consultants and safety consultants, who will point out to businesses that these punishments have been introduced, and that the liabilities that they will face are much steeper than they were previously.
Mr. Bercow: Will my hon. Friend give way?
Mr. Hoban: Will my hon. Friend bear with me? I have given way to him several times already and I will of course give way to him imminently, but I want to finish this point.
The Bill will provide a sales pitch for health and safety consultants throughout the country. They will tell employers, "We must look again at your health and safety procedures, because you do not want to go to jail." Even those employers who are comfortable with their existing health and safety procedures will feel under considerable pressure to accept the blandishments of health and safety consultants who are using the Bill—
Lawrie Quinn indicated dissent.
Mr. Hoban: The hon. Gentleman shakes his head, but I have learned from talking to employers in my constituency that often nothing will open their cheque book more easily than the threat of sanctions or penalties. Good employers, not only bad ones, will feel the impact. I worry that the legislation will be used unscrupulously by some consultants, which no Member intends, to generate more business and cause businesses to incur additional costs. I am grateful to my right hon. Friend the Member for Bromley and Chislehurst (Mr. Forth) for raising that valid point because it is important to place on the record that we must be wary about the use to which the Bill will be put by consultants.
Mr. Bercow: I am grateful to my hon. Friend for giving way. That last point is especially applicable to small firms, which typically do not have in-house legal, finance or personnel departments and will therefore be required to seek and pay for outside consultancy advice. Given that 99.6 per cent. of companies in the UK employ fewer than 100 people and that those companies generate approximately two fifths of our national output and employ more than 50 per cent. of the private sector work force, are these not relevant matters that must be taken into account in our deliberations?
Mr. Hoban: My hon. Friend, as ever, makes a telling point, particularly about the impact of regulation on
small businesses. It came as a surprise to me, having worked in the large corporate sector before coming to the House, that when I looked at an analysis of businesses in my constituency I found that very few of them—only 30 or 40 organisations—employed more than 50 people. The rest were small businesses, many with fewer than 10 employees. My concern is, as ever, about the impact of legislation on businesses. What pressures arising from the Bill will they need to reflect in their own procedures and what additional costs will they bear?Clause 2 deals with employers' liability insurance, which is of great concern to employers up and down the country. The British Insurance Brokers Association claims that 500 small and medium firms went out of business in 2002 because of a sharp increase in employer liability premiums and that a further 10,000 are at risk. In trying to understand the reason for increased premiums, many commentators have referred to the growing compensation culture, the sense that the litigation that we see as characterising the American legal system is creeping across to the UK and that employees, customers or passers by will sue if they suffer an injury that can be related back to a business or a Government body. Indeed, the compensation culture has had a dreadful impact on the health service.
There has also been a rise in successful claims by staff injured at work. Each year, 30,000 people are seriously injured in the workplace. Another consideration is the impact of asbestos-related claims. Three or four months ago, I remember my hon. Friend the Member for Buckingham making a very measured and thoughtful contribution on the impact of statutory instruments on asbestosis. Indeed, if he catches your eye, Mr. Deputy Speaker, he will be able to relate that experience to the Bill that we are considering today.
Insurance companies also refer back to the impact of 11 September, which resulted in many of them suffering large claims. It brought a greater appreciation of the risk that companies suffer from terrorist and other activities, which has led to an increase in insurance premiums.
Another factor is the stock market slump. Many insurance companies invest the proceeds of their policies in bonds and equities as a way of reducing the cost to businesses as they set aside a reserve for claims. That money is invested and it is assumed—or hoped—that the investment value of the reserves will increase. The increase is used to offset the cost of insurance to employers as well as to householders, car owners and so on. The downturn in the stock market in the past fortnight, when there were 10 consecutive days of falls in the FTSE 100, was a historic occasion and indeed a sad one for those with pensions or investments in the stock market. It will have made the financial pressures facing the stock market even harder. This week, there was a severe markdown in the share price of one insurance company because there were unwarranted concerns about its solvency. Insurance companies are working in a difficult market, and consequently premiums for employers liability insurance have increased. Aon, the world's second largest insurance broker and a major employer in this country, said in a survey published in December that many firms' premiums had doubled in
the past 12 months. It also suggested that premiums are set to rise by a further 15 per cent. in the current financial year.
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