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Employers' Liability Insurance
4. Mr. Alistair Carmichael (Orkney and Shetland): What assessment her Department has made of the impact of the recent changes in the cost of employers' liability compulsory insurance cover on UK businesses. [136677]
The Parliamentary Under-Secretary of State for Trade and Industry (Nigel Griffiths): The Department of Trade and Industry is working closely with the Department for Work and Pensions, which oversees this insurance, and with the Treasury, which oversees insurance markets.
I have encouraged the Association of British Insurers and the Federation of Small Businesses to adopt a code of good practice, ensuring 21 days' notice of renewals. We have produced guidance to help insurers better distinguish between good and bad safety management and I am pleased to see it reported that this year's rises are more modest than previously.
Mr. Carmichael : I am grateful to the Minister for that reply and I welcome his announcement, although the situation in my constituency, which is heavily dependent on small and medium-sized enterprises, indicates that
that will not be enough. Some 25 per cent. of businesses in my constituency have reported an increase of 100 per cent. or more in the cost of employers' liability compulsory insurance premiums in the past 12 months. Can meaningful regulation be introduced to ensure that the insurance industry operates in a transparent manner and does not discriminate against SMEs in that way?
Nigel Griffiths: I am concerned about reports that the insurance industry has been using employers' liability compulsory insurance as a loss leader, writing premiums well below underwriting losses and making subsequent adjustments. Of course, small businesses find that very difficult to cope with. The Office of Fair Trading looked at this issue in the light of factors such as competitiveness and transparency and decided not to take action at this stage. However, the DTI always keeps such matters under review.
Mr. Eddie McGrady (South Down): Is the Minister aware that SMEs in Northern Ireland are suffering a double jeopardy, in that their premiums are already beyond mainland levels? Does he understand that there has been an average increase of 500 per cent. in the past three years? The premium of one of my constituents, who has a no-claim record, was £500 three years ago; now, it is £8,000. Businesses in Northern Ireland cannot sustain such increases. A fact-finding study in November 2002 reported in March 2003, but no action was taken. A further study commenced last month. SMEs in Northern Ireland cannot wait any longer—they are going out of business as I speak. Will the Minister expedite his resolution of this serious problem?
Nigel Griffiths: I am aware of the problems in Northern Ireland, because I discussed them on my last visit to see representatives of the Federation of Small Businesses there. The hon. Member for South Down (Mr. McGrady) highlights what appear to be unacceptable escalations in premiums. We have been working with and on the Association of British Insurers to try to ensure that proper risk assessments of companies are made. I visited several small businesses that, without experiencing circumstances that might adversely affect their claims, have seen their premiums rise to unacceptable levels. I have made it clear to the insurance industry that such rises are indeed unacceptable.
Mr. Henry Bellingham (North-West Norfolk): The Minister referred to the Federation of Small Businesses, but has he seen the latest "Financial Statement and Budget Report", which pointed out that 6 per cent. of its members have faced reductions in profits as a direct result of soaring insurance premiums? Furthermore, 19 per cent. are having to lay off staff, and a worrying 8 per cent. reported that they were trading without proper insurance. A year ago, the Minister said that he took that issue very seriously. We have had several reports and heard many platitudes, but when is the small firms Minister really going to listen to small firms?
Nigel Griffiths: I deplore any company that is trading without proper insurance, which is illegal. I advise the hon. Gentleman to supply any information on failures to hold valid insurance to the Health and Safety
Executive. Since the matter was raised last year and before, the latest survey, which was last month—the Bank of Scotland has commented on it—showed that, whatever the hon. Gentleman says about returns and profits, a third of small businesses intend to recruit staff and 20 per cent. are to increase net investment. That tells me that small businesses have, in their customary way, coped with great fortitude and are not being deflected from making the necessary investment to grow. That is what I want to see.
Mr. Martin O'Neill (Ochil): Does my hon. Friend understand that it is not just small and medium-sized enterprises that are affected by the problem? There are several construction companies in my constituency, and in the past they prudently entered into two or three-year deals to cover insurance premiums—but when they reached the renewal date, they found that those premiums were doubling or trebling. Those companies require employers liability insurance for health and safety reasons, because the construction industry is one of the most dangerous. If they have either to cut corners or to reduce staff, it is not good for the industry as a whole. Big businesses are being hit as well as small, and who will pay for that? It will be the safety of the workers.
Nigel Griffiths: As the Minister responsible for construction, I know that that sector has one of the best safety records in the world, and I do not want anything to jeopardise it. I hope that my hon. Friend and the House will be pleased to learn that the DTI construction directorate has engaged an insurance industry specialist to liaise more closely with the industry to ensure that it is properly covered. The necessary steps must also be taken to ensure that building and construction sites meet the highest safety standards, which will also help to reduce their insurance premiums. I want to see them rewarded for taking such action.
Mr. Andrew Stunell (Hazel Grove): May I draw the Minister's attention to a small construction company in my constituency, which, after decades of claim-free operation, has had an eightfold increase in premiums in five years? That is clearly a serious problem for companies that have taken account of the safety factors, but are still being penalised by an insurance industry that seems deaf to the claims records and the needs of small businesses.
Nigel Griffiths: The hon. Gentleman highlights a matter that we all find unacceptable. I am sure that he has made direct representations on behalf of his constituents to the insurance company concerned, and I am happy to add my voice as the Minister and write to the company myself.
Stamp Duty Land Tax
5. Mr. Mark Prisk (Hertford and Stortford): What recent representations her Department has made to HM Treasury concerning the impact of stamp duty land tax on small businesses. [136678]
The Parliamentary Under-Secretary of State for Trade and Industry (Nigel Griffiths): My right hon. Friend the Secretary of State for Trade and Industry made
representations to the Treasury concerning the potential impact of the proposed changes on businesses. She was pleased that the change announced on 20 October will assist small and medium-sized enterprises and business start-ups, and she welcomed the Chancellor's decision to more than double exemption for businesses with a net present value of less than £150,000.
Mr. Prisk : The Minister knows that businesses small and large remain bitterly opposed to the fourfold increase in tax on their leases. Is he also aware that business feels strongly that that will distort the leasehold market and restrain small business investment? Would he, as the Minister for Small Business and Enterprise, agree to meet a small delegation of businesses so that they can express their concerns on a matter that may well distort the leasehold market for small business right across the country?
Nigel Griffiths: I do not accept that. Almost two thirds of commercial leases signed by small businesses will be exempt. Previously, in most cases, stamp duty was paid, if at all, on 2 per cent. of one year's rent. Now the first £150,000 is exempt, and thereafter the rate is 1 per cent. The entire House should welcome this measure to close a tax loophole. I regularly meet the key federations and organisations representing small businesses, and I shall be happy to discuss the matter with them.
Mr. Tam Dalyell (Linlithgow): Is my hon. Friend aware of the sheer difficulty experienced by those who apply for grants? Would he contact the Association of Marine Scientific Industries, which is particularly concerned about Natural Environment Research Council applications?
Nigel Griffiths: I am happy to respond in writing to my hon. Friend.
Workplace Consultation
6. Mr. Wayne David (Caerphilly): What action she is taking to ensure greater rights to consultation in the workplace. [136679]
The Secretary of State for Trade and Industry (Ms Patricia Hewitt): The information and consultation directive which comes into force in March 2005 will give new rights to employees to consultation about matters that affect them in the workplace.
Mr. David : Does my right hon. Friend agree that it would make a great deal of sense if companies did not wait for the deadline of 2005, and if companies and trade unions co-operated—like Tesco and Asda, for example—to ensure that there is effective consultation long before 2005?
Ms Hewitt: I entirely agree with my hon. Friend and I am delighted to say that we have already been working closely with both the CBI and the TUC. I pay tribute to Digby Jones and Brendan Barber for the work that they have done in agreeing a framework for implementation. Now that that is in place, well in advance of the directive coming into effect, I hope that many more businesses
will take advantage of the opportunity to create an effective partnership with their work force and its representatives.
Mr. Tim Yeo (South Suffolk): Given that Britain faces more acute competition—[Interruption.] I shall take three minutes over this question. Given that Britain faces more acute competition internationally for both investment and jobs, will the Secretary of State undertake, whenever additional obligations are placed on British employers, to carry out an assessment of the likely impact of those obligations, regardless of how desirable or well-intended they may be, on the job prospects over the next 10 years of less-skilled workers?
Ms Hewitt: I am delighted that the hon. Gentleman is in favour of competition, if not for the leadership of his own party. He raises a serious matter—the impact upon the least-skilled workers in our community of the enormous process of restructuring that is taking place not just in the United Kingdom and Europe, but right across the world. It is therefore central to our skills strategy, to the work that we are doing in the regional development agencies—which I think the Opposition intend to abolish—and to the work that we are doing in the most disadvantaged areas that we help those low-skilled workers, who are most vulnerable to displacement in the global economy, to get the skills and the jobs that they need. I remind the hon. Gentleman that despite all those global changes, we have 1.5 million more people in work than we had six years ago.
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