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Jim Sheridan (West Renfrewshire) (Lab): Can the hon. Gentleman define in more detail his difficulties with consultation? Is it wrong for British workers to be consulted on where the company is going and how it should be performing? What is the difference between that and his party's constant criticism of the lack of consultation by the Government?

Mr. O'Brien: We need to be careful not to go too far down highways and byways. I shall give a serious answer to the question. If the word "consultation" is used to provide a comfort blanket for decisions that have already been made, whereas the real demand is for a share in decision making, that takes away the responsibility of those who are charged with making decisions. That is the big difference, and why we must be careful about the way we approach the matter. In any relationship, including employer and employee relationships across the spectrum, the key is trust and common purpose. That is the same with all relationships, and it is achieved through respect and communication. Consultation is a word that is intended to increase involvement. We must be extraordinarily careful to scrutinise what is truly meant. The best and most successful companies already have excellent communication schemes, which is where the trust is built up.

Mr. Tynan: The hon. Gentleman may find it difficult to accept, but I agree with some of those comments. However, trust and understanding are a two-way street. If there are genuine problems in a company and the work force—people who have dedicated their lives to the company—are involved, there is a chance of making

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real progress and avoiding the pitfalls faced by companies that simply take decisions with no regard to their employees, and then have to close. That is a better way of doing business.

Mr. O'Brien: All of us genuinely believe in the sentiment expressed by the hon. Gentleman, but the issue is how to apply it. A job cannot be sustained unless the business has a fundamental future and an ability to make a return on the capital invested. The only thing that matters—as the hon. Gentleman is right to say—is that in having good communications and building trust, and all the respect that comes from that being a two-way street, there must be a recognition of those who have the right and responsibility to make the decisions and those who want to be part of the common enterprise. Usually, the best thing is to ensure that people do not try to effect decisions that are unsustainable, because that creates higher expectations, which makes the fall from hope and expectation even greater. We could enter into a deep academic discussion, but the hon. Gentleman made a serious point and I am happy to try to give a serious answer, with some of the benefit of my own background and experience.

Tony Lloyd: I am trying to listen carefully to the hon. Gentleman's words, but so far they are only words. He was asked earlier about the situation at Vauxhall when it told its work force, not directly but through the local radio, that they were to lose their jobs. It is that sort of background that shows that a large company that claims to be responsible needs a legal framework to empower its workers to access the rights that the hon. Gentleman says that he wants them to have. As the Government have worked hard with the CBI and the TUC to obtain a framework agreement, why can he not have the good grace to accept that that agreement is a model of co-operation between both sides of industry? It is consistent with the language that he has used.

Mr. O'Brien: On the last point, we must be careful about what the House is required to do in primary legislation. It is because of everything that is not in the Bill that the CBI has welcomed it in principle, as do I, on that basis. I have not taken issue with the CBI's involvement in the process, but I do not believe that what is in the Bill needs to be dealt with in primary legislation. I agree with the hon. Gentleman that what Vauxhall did was an example of the most extraordinarily bad practice, and a cavalier way of dealing with a deep commercial crisis—but it is not necessary to introduce legislation to cover everybody because of one exception. Others may be able to cite one or two other exceptions, but it is dangerous for hon. Members and Governments always to think, as Edward VIII did, that as soon as something goes wrong, as soon as our postbags reveal a problem, "something must be done", and that we are here only to pass laws and place burdens on business.

We must recognise that our role is not to get in the way of business, and a primary legislative framework is not the right way to encourage the kind of behaviour that the hon. Gentleman seeks. The best way to encourage such behaviour is to establish a benchmark and to obtain best practice through good communication. Clearly, what Vauxhall did on that

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occasion was the very worst example of bad communication and I do not endorse it, but we do not need this Bill to deal with that mischief. That is my answer to the hon. Gentleman's question.

Gregory Barker (Bexhill and Battle) (Con): Does my hon. Friend agree that if one believes in free markets and freedom for business, an inevitable consequence will be that from time to time there will be bad practice, and however deplorable that may be, it is infinitely better to have a system that encourages and nurtures free enterprise than a system that strikes at its roots and is informed by the command economy model? We have seen where that ends.

Mr. O'Brien: All hon. Members have the benefit of living in a free democratic society, coupled to a free market. I listened carefully to what my hon. Friend said, but one thing that has characterised the Government's mindset in introducing legislation, particularly in this area, is that somehow we can have all the benefits of free markets and free democracies without the risks. However much people might wish it, there is no such thing in life as a risk-free reward. In order to have the benefits of a higher quality of life, to have what competitiveness and good business brings us by being a country that can compete in the world, which gives people the chance to aspire to a higher quality of life, people must take risks. It is not possible for people to have no risk in their lives. It is a question of balance.

I am not making some fundamental point that will divide all Members of the House against each other—far from it. I simply say that in a world where politicians believe that their role is to pass laws and regulations, it is becoming too easy to think that we can continually prescribe best practice. Efficiency usually comes because the winners are the best at what they do, and also the best communicators and the best at looking after their work force. That is precisely what the Secretary of State said earlier: the best succeed. It is better not to think that by legislating we will cause people to do the right thing. It is far better that people wish to be winners and successful, and they will achieve that by following the best practices of other winners.

The Bill, if enacted, could force British firms to consult staff on menial issues, and will impose more costs on business and undermine the UK's competitiveness. That will come on top of what this Labour Government have already allowed Brussels to impose. No less than 40 per cent. of the employment regulations applicable now in the UK derive from Brussels. It is absurd to think that companies should be forced by bureaucrats in Brussels to consult staff on the smallest of issues. It is not their role to tell us or those businesses what to do. The directive is therefore unnecessary, just as Lord Sainsbury said, and yet again imposes a one-size-fits-all approach to employee relations, which, as the Engineering Employers Federation says, helps neither those working in the business nor the business owners, and further erodes Britain's competitive position.

The Government are yet again choosing to adopt the job-destroying EU employment model that undermines labour flexibility. Compelling companies to consult and inform their work force on everyday issues will be burdensome, and is not the best way to achieve best

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practice. As I have said, most well run companies already keep their work force fully informed about relevant decisions, so why do we need to regulate? The essence of good communications is flexibility, as almost all companies know. A one-size-fits-all blueprint fails to recognise the diversity of companies and will mean rigidity and formality where diversity and flexibility are essential.

EU regulations are already driving down business productivity and eroding this country's ability to compete abroad. Under this Government, it is staggering that as many major EU directives have been implemented in the UK as in the whole of the preceding quarter of a century of our EU membership. For that, the DTI must take the lion's share of the blame. It is for that reason that on the Secretary of State's watch, the Department has become known as the stifling regulator-in-chief against business.

Mr. Hopkins: Does the hon. Gentleman agree that the best example of the free market unconstrained by trade unions was in the 19th century, which saw mass unemployment in Europe and mass emigration to America, and the best example of a regulated market was in the post-war era from 1945, when there were the highest levels of growth and full employment across the developed world?

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