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31 Jan 2003 : Column 1171—continued

Mr. Deputy Speaker : Order. I am prepared to allow a certain degree of reference to background in a Second Reading debate, but the hon. Gentleman should relate his remarks to the Bill fairly soon.

Mr. Nicholas Brown: Further to that point of order, Mr. Deputy Speaker—

Mr. Deputy Speaker: Order. It was not a point of order. I was simply putting the hon. Gentleman on the right track.

Mr. Brown: On a point of order, Mr. Deputy Speaker, would it be right for me to point out to the House that the Bill does not alter the regulations imposed on business at all? It relates to the penalty regime.

Mr. Deputy Speaker: That is not a point of order for the Chair but more a matter for debate. The right hon. Gentleman has made the point.

Mr. Bellingham: When examining the overall framework of burdens on business, we must consider what businesses must do when things go wrong. There is no question but that parts of this Bill, although it is well-intentioned, will lead to more paperwork. The hon. Member for Scarborough and Whitby wants to encourage best practice, in which we support him, but is he not using a sledgehammer to crack a nut?

Lawrie Quinn: I accept what the hon. Gentleman says about the cost of regulation to business, but what is his assessment of the cost to the British economy of the 28,000 serious accidents and 300 fatalities that happen at work each year? Would not it be very good for business to bring down that burden? Would not that help the economy?

Mr. Bellingham: It is right for business to tackle that problem, but the hon. Gentleman is talking about the very small percentage of companies that follow worst practice. The overwhelming majority of our companies have best practice in place and do not have problems in the workplace. Their accident record is excellent.

Lawrie Quinn: The hon. Gentleman commended me for the research that I have done. I note from my documents that accidents at work cost British business between £11 billion and £18 billion each year—that is equivalent to between 2 and 3 per cent. of GDP. To bear down on that burden and prevent injuries must be a sensible target for the House to aim at.

Mr. Bellingham: I quite agree, and that is why it is important that the Bill goes to Committee, but it is also important to consider what businesses and business organisations such as the CBI, the Institute of Directors and the Federation of Small Businesses have to say about it. The hon. Gentleman mentioned that he had talked to the FSB in his region, but the federation nationally, although it understands the aims of the Bill,

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is concerned that aspects of it will bear down harshly on businesses that make what could be simply a one-off mistake, and perhaps close them down.

Mr. Hoban: My hon. Friend has painted a clear picture of the burden of regulation on small businesses. Does he agree that the sheer rate and volume of regulation, and regulatory changes, make it difficult for business to keep in touch with what is happening, so there is a great risk of inadvertent breach of the rules, for which people could even be liable to imprisonment?

Mr. Bellingham: That is a fair point. Again, my hon. Friend shows prescience, because I will come to that in a moment.

The average small business man now spends up to 14 hours a week dealing with paperwork and form filling. Many businesses have taken years to build up, and many have been passed down the generations, and the law of unintended consequences following the enactment of the Bill could mean the end for them. That is what I am extremely anxious to avoid.

Mr. Bercow: My hon. Friend is developing his arguments in his usual measured way. Does he accept that it is important not to compromise the Conservative commitment to, or record on, health and safety at work, a useful adumbrated summary of which can be found in that excellent tome "Conservative Social and Industrial Reform" edited by Mr. Charles Bellairs?

Mr. Bellingham: I expect that there will be snow on the ground and little to do outside this weekend, so I will follow my hon. Friend's advice and go home equipped with that volume to study. He is absolutely right, because the whole thrust of our policy is not to bear down on existing health and safety legislation but to reconsider some of the other burdens on business. I am sure that he will agree that we do not want to make the health and safety regime any harsher, as we probably have the right balance in place for business, employees and the wider public who may have contractual relations with businesses and could be the victims of injuries.

Mr. Bercow: I assure my hon. Friend that there need be no disharmony between us on this or any other matter. Does he agree that it is also important to establish clarity as we contemplate legislation? In that context, what assessment has he made of paragraph 12 on page 2 of the explanatory notes, in which reference is made to the intended replacement of the current maximum fine of £2,500 "for each day prosecuted" with a maximum fine of £20,000? Could not the significance of the words "for each day prosecuted" be very great for an accidentally errant firm?

Mr. Bellingham: I spotted that as well. Again, my hon. Friend shows prescience because I shall come in a moment to the issue of fines and the threat of prison sentences. First, however, I want to flag up one further set of regulations that have arisen from the Government's legislation, which I would describe as home-grown red tape. I refer to the flexible contracts regime. Although a larger corporation could cater for and cope with that, a small contracting business of

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perhaps 10 employees—a firm with an excellent record of avoiding accidents, which implements a regime that goes far beyond that proposed in the Bill—could, albeit in extraordinary circumstances, become involved in some accident and, as a consequence, suffer a heavy fine. Such small firms might find it difficult to cope with demand for flexible contracts. That is another reason why we feel strongly that the Government have gone too far on the supply side of the economy. Moreover, a great deal of legislation has arisen as a result of the social chapter, to which the Government signed up when they first came into power—

Mr. Deputy Speaker: Order. I am afraid that the hon. Gentleman is again straying wide of the mark.

Mr. Bellingham: I am grateful for your advice, Mr. Deputy Speaker.

Page 5 of the Bill makes it clear that the social chapter is relevant, but I shall not push my luck with you. I merely point out that the sort of firms that the Bill would catch will be affected by the agency workers directive and the equal treatment directive. Such directives are coming down the track at an alarming rate and will hit corporate Britain very hard.

Mr. Bercow: I do not want to go down the wrong path any more than my hon. Friend wanted to do so. We all take note of your exhortations in these circumstances, Mr. Deputy Speaker, but does my hon. Friend recall that the working time directive—I shall relate that directly to this important Bill—was justified at the time of its introduction by many of our European Union partners by reference to health and safety considerations, which, as all hon. Members present know, are subject to qualified majority voting? Is it not pertinent to ask the hon. Member for Scarborough and Whitby (Lawrie Quinn)—or through you, Mr. Deputy Speaker, the Minister for Work—whether the Bill's provisions would, at European level, be subject to majority voting under the social chapter? That is relevant when considering whether we should take this measure further and into Committee.

Mr. Bellingham: I agree with my hon. Friend; the Bill needs to go into Committee and be discussed in more detail.

Perhaps even two years ago, before various additional burdens were imposed as a result of the social chapter, one might have said that businesses could easily live with this legislation. We should consider the Bill in the context of legislation that might not immediately impose regulatory burdens on business but could do so if things started to go wrong. That is the background of today's businesses. There is serious wealth destruction in the small firms sector, which is why the Government have said that the key test that they will apply to any new measure is whether it will hit wealth creation. Perhaps that is why this is not a Government Bill, but the Government have instead chosen to rely on a Back Bencher to promote the Bill as a handout.

I have explored the wider business context, which is important. Although you, Mr. Deputy Speaker, were slightly irked when I strayed a bit too widely on two occasions, which is understandable, when a Bill affects business it is incumbent on hon. Members to examine the wider business context in which the Bill is to operate.

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My hon. Friend the Member for Fareham talked about the compensation culture, which appears to have got completely out of control in this country, and he rightly mentioned the crisis in public liability insurance. Employer and public liability insurance premiums have gone through the roof. Although we are pleased to see him here, I was slightly concerned when the Minister for Work said that his report would come out in late spring or early summer, because the crisis is happening now. I shall remind the House of the two cases that I mentioned earlier, because they are not one-off cases. I have been in close contact with the Federation of Small Businesses, the Forum of Private Business and several other organisations that have been feeding me and other hon. Members horror stories about what is happening.

A small specialist construction firm on the south coast requires insurance cover of £5 million to secure contracts from its regular customers. This year, that business was able to secure cover of only £1 million at a cost of £8,000, whereas last year £12,000 bought cover for £10 million. As we speak, the firm, which is in the specialist contract hire business, is getting rid of employees and restructuring its business entirely. It has had to tell a number of its key customers, "Sorry, but we cannot trade with you."

That is a classic example of a firm that has faced an extremely difficult choice: whether to continue to serve the customers that it has successfully served for many years, or to tell those customers that because it cannot get insurance, it is having to get rid of staff and turn away business. Many firms have taken the first option and are now trading illegally, which is extremely unfortunate and we cannot condone it.

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