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6.26 pm

Mr. Henry Bellingham (North-West Norfolk) (Con): We have had an excellent debate that has been well informed and generally good humoured. We have no intention of opposing for opposition's sake, and we welcome a number of the Government's proposals.

We had said that it was too early to review the Employment Rights Act 1999, but we acknowledge that the Government were forced to act by the 2002 European Court of Human Rights judgment in the Wilson and Palmer case. The result is clause 23. We agree that employers should not be allowed to offer unfair inducements for employees not to take up their full union rights. The Secretary of State commented on that in some detail, as did the hon. Members for Aberdeen, Central (Mr. Doran) and for Wolverhampton, South-West (Rob Marris). The hon. Member for Hayes and Harlington (John McDonnell) flagged up as potentially misleading the terminology in line 30 on page 19. Perhaps that can be considered in Committee.

We also welcome the provisions in clause 27, which further clarifies an employee's right to be accompanied at an employment tribunal. That has been widely welcomed this afternoon. The hon. Member for Aberdeen, Central remarked on it in some detail, as did my hon. Friend the Member for Old Bexley and Sidcup (Derek Conway) and the hon. Member for Dagenham (Jon Cruddas). There is wide agreement in the House that the measure is a sensible, pragmatic improvement. We also support the protection from unfair detriment or dismissal for employees acting as companions. All in all, I think that the clause will go through the Standing Committee fairly quickly.

I turn now to the eight-week rule and the lock-out days being added to the protection period for employees taking lawful industrial action. That, obviously, is a response to the ruling of the employment tribunal in the Friction Dynamics case. We have only had one case, and I should like the Minister to tell us exactly what legal advice the Government received on the matter. That could wait until the Committee proceedings. A number of colleagues mentioned the subject. The hon. Member for Ynys Môn (Albert Owen) went into it in some detail, drawing on his Welsh experience, and the hon. Member for Caernarfon (Hywel Williams) displayed great expertise and not a little passion. My hon. Friend the Member for Huntingdon (Mr. Djanogly) asked whether the Government could have appealed against the judgment; perhaps the Minister can answer that in his winding-up speech. But having lost the case, the Government had no alternative but to take action in the Bill.

As my hon. Friend the Member for Eddisbury (Mr. O'Brien) pointed out about four hours ago, the Opposition take on board and acknowledge that the Government have listened to quite a few of the concerns voiced by industry and acted accordingly in some areas, and it would be churlish not to flag that up. For example, the small firms exemption for organisations employing fewer than 21 people was widely welcomed by the Federation of Small Businesses, the Forum of Private Business and a number of other organisations. We think that the Government did the right thing on

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that score, even though the hon. Member for Manchester, Central (Tony Lloyd) disapproved of it and a number of his colleagues were also fairly critical.

The Government are right that clause 15 will confirm that the core areas of collective bargaining will remain pay, hours and holidays, and that must make sense. We also welcome those provisions of the Employment Relations Act 1999 that have been left in place after last year's consultations—for example, the requirement for 10 per cent. union membership for a claim to be valid, and the rule requiring 40 per cent. of those eligible to vote if a ballot is ordered. I do not agree with the hon. Member for Manchester, Central who said that the 40 per cent. was unfair and too stiff a threshold and target. If it had been altered, it would have been a mistake.

Having said that, we have a number of key areas of concern and we will table various amendments in Committee. I have struck up a rapport with the Minister since I have been shadowing him and we seem to get on very well. He has suggested that I might come round to the Department for a cup of tea and some biscuits to discuss the amendments. Perhaps if it is late in the evening he might stretch to a glass of sherry. I can assure you, Mr. Deputy Speaker, that we will be entering into the spirit of the offer of constructive engagement, but our starting point is obviously a general wariness of imposing further unnecessary regulatory burdens on small and medium-sized businesses that can emerge from this employment legislation.

As my hon. Friend the Member for Huntingdon pointed out, a point also flagged up by my hon. Friend the Member for Hexham (Mr. Atkinson), most European countries are reducing the level of employment legislation, not adding to it. Furthermore, my hon. Friend the Member for Old Bexley and Sidcup pointed out that the number of industrial tribunals had increased substantially, fuelling the compensation culture—I think the figure went from 35,000 cases six years ago up to 125,000 cases last year. He talked about the compensation culture and he had a good point.

As my right hon. Friend the Member for South-West Surrey (Virginia Bottomley) and my hon. Friend the Member for Hexham pointed out, had the Government not given up the opt-out on the social chapter we would not have to be implementing the EU directive on information and consultation, which will be particularly onerous for small and medium-sized enterprises.

A number of hon. Members have cited cases today showing the lack of consultation by companies in their constituencies, and several good points were made. The hon. Member for Amber Valley (Judy Mallaber) pointed out that Coats Viyella embarked upon almost no consultation whatever. The hon. Member for Greenock and Inverclyde (David Cairns) cited two companies in his constituency, FCI and Misco. In the case of Misco, there was a 20-minute warning to employees. Furthermore, the hon. Member for Ynys Môn also mentioned a number of cases, including some companies that had properly consulted and had exactly the fair and right procedures in place.

As my hon. Friend the Member for Eddisbury said, consultation is all about trust and building up a common purpose and respect through the right level of communication.

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Where that happens, is there any need for the strictures and regimentation of legislation? That is important, because the burden will fall disproportionately on SMEs and smaller firms. We cannot countenance the suggestion by the hon. Member for Hayes and Harlington that the directive should be extended still further.

In its new role, the Central Arbitration Committee is required to take into account the employer's view on the appropriateness of the proposed bargaining unit, but it is not obliged to give equal consideration to the views of both parties. That is worrying. Under the 1999 Act, trade unions were required to supply to the CAC information on employees that would help the employer to make plans. The Bill clarifies the kinds of information that that could imply, but states that such information is not deemed to be in the union's possession unless it is held centrally in documented form. There is no similar exception for employers, who are obliged to make employees' personal details available to trade unions via the CAC. What are the implications of that for an employee's privacy, especially one who does not wish to have their details given to trade unions? We will return to that in Committee.

Clause 37 deals with changes in trade union structures. For example, in the case of the amalgamation of two or more unions, the amended law would automatically recognise the amalgamated union provided that all the unions involved hold certificates of independence. The union would not have to reapply to the CAC for recognition—therefore, employers would have no input into the decision-making process.

Those may be fairly minor changes, but, as my right hon. Friend the Member for South-West Surrey said, the cumulative effect will be much more serious. The Secretary of State said that the cost of the Bill will be very small, but the DTI has made it clear that the implementation of the information and consultation directive will result in businesses having to bear

We are very wary of these extra burdens being put on to small and medium-sized enterprises. It is always smaller companies that have to bear the burden of such changes—many larger companies can take them in their stride. As my hon. Friend the Member for Bromsgrove (Miss Kirkbride) said in her very good speech, many of the multinationals and multiples can cope with them quite comfortably—indeed, they often help their competitive advantage.

The recent quarterly report by the Forum of Private Business says that the number of small businesses reporting expansion has fallen from 44 per cent. of its members in 1998 to 36 per cent.—all of which took place during an extremely strong period for the economy.

Although we welcome the recent unemployment figures, several of my hon. Friends mentioned the hidden unemployment that has resulted from job losses in manufacturing. According to the labour market statistics produced by the Office for National Statistics, 51,000 manufacturing jobs were lost in the six months from March 2003. The Secretary of State criticised the record of the last Conservative Government, but since her Government have been in power, 600,000 manufacturing jobs have been lost. Manufacturing output is now lower than in 1997, and manufacturing investment is 30 per cent. lower than in 1997.

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As my hon. Friend the shadow Secretary of State pointed out, last month there was a record monthly trade gap of £3.9 billion—a very high figure indeed. And all the time more new jobs are being created in the public sector—350,000 from 1998 to 2002.

Obviously, business will have to pick up much of the bill for the Government's spending spree in the public sector.

The Government inherited a favourable economic situation. As my hon. Friend the Member for Eddisbury pointed out, Britain was ranked fourth in the world in international competitiveness, according to World Economic Forum figures. It has now fallen to 15th, behind Finland, Sweden, Denmark, Norway, the Netherlands and Germany.

Let us consider inward investment. When the Government came to office, Britain was the No. 1 place to do business. In 1996, Britain attracted the lion's share of inward investment in Europe—more than Germany, France and Italy combined. Even in 2001, our share was £60 billion—not euros but pounds. Last year, it had fallen to £25 billion—a fall of 60 per cent.

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