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12.44 pm

Mr. Nigel Evans (Ribble Valley) (Con): I congratulate the hon. Member for Nottingham, East (Mr. Heppell) on his success in the private Members’ ballot and on introducing a Bill that he believes will do some good for the rights of British workers.

I was a little disappointed that the right hon. Member for Coatbridge, Chryston and Bellshill (Mr. Clarke) refused to take my intervention. He suggested that all
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that was being asked was that the Bill be allowed to go upstairs, where it could be kicked about a bit to see what impact it would have. I have been successful in a few private Members’ ballots, but only one Bill was enacted, and that was because it had the support of a Conservative Government. An enlightened view was not taken on my other Bills because the Labour Government were not interested in giving them a fair wind. If the right hon. Gentleman looks at his voting record on Fridays, he might find that he voted with the Government not to send private Members’ Bills upstairs for them to be dissected and considered. We know that private Members’ Bills are an opportunity to introduce a measure that the promoter would dearly love to be enacted, but that is contingent on the Government’s view, which is why we wait with bated breath to hear whether the Minister believes that the Bill should go upstairs to be operated on—it appears that it will require extensive surgery—and resuscitated in a form that can still walk and breathe. I suspect not, from what I have heard this morning.

I have mentioned Brussels a few times. I suspect that this week we have witnessed another takeover of this place by Brussels, yet I see no protection of the rights of the British people in the form of a referendum. However, I put that to one side. For measures such as this Bill, what happens in Brussels is important. Like my hon. Friend the Member for Shipley (Philip Davies) and the hon. Member for Nottingham, East, I would far prefer to see us enacting legislation that we think is important, so the sovereignty of this House is important. At the same time, we must recognise that the powers that we have shifted to Brussels and those that it has taken to itself over the years mean that we could legislate in one area, but Brussels could then propose something similar or completely different. We need more investigation on that.

As my hon. Friend the Member for Shipley said, colossal sums are being shifted around—far more than I can even pretend to understand—and some of that is pension fund money in which trade unions invest. The pensioners who will be in receipt of the money that is invested will have been workers and will not want their investments to be abused in such a way that workers’ rights will be denied. We should have a fuller understanding of exactly what funds and investments we are discussing. Some of the investments are long term; they are not about getting in, doing some damage and seeing how much profit can be made before getting out, without due deference to the investments made. As I said in an intervention, in many cases investments are made in businesses that are believed to be going concerns, and the last thing anyone wants to do is meddle with the business or change it any way, shape or form.

Philip Davies: I agree entirely. A private equity firm gave £1 million to Remprobe, one of my local firms, which makes software to help firms monitor their energy consumption, and helped it to develop its product for supply to large corporations. Such companies are helping smaller businesses and their workers, not being a hindrance.

Mr. Evans: If the hon. Member for Nottingham, East has done one great service this morning, it is giving us an opportunity to talk about the impact of
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private equity on this country. I am a poor, simple boy from Swansea; I should not understand these things, but I have had an education this morning about the importance and value of private equity.

Philip Davies: My hon. Friend has more money than a private equity firm.

Mr. Evans: I wish.

The Government think that pre-legislative scrutiny is a good idea. I was not so sure to begin with, but I now think that it has merit, and that applies to private Members’ Bills, too. It is important that we consult all the organisations that would be affected by any Bill proposed in the House. We should know the view of the Institute of Directors, the CBI, the Federation of Small Businesses and the trade unions. Of course, we should get in the trade unions and find out what they have to say about such legislation, too.

The right hon. Member for Coatbridge, Chryston and Bellshill spoke with passion about some of the abuses that have taken place in firms that he is familiar with. Those abuses should be driven out of the system. We must protect the rights of workers who feel that they are powerless against people who exploit them for no merit other than simple profit and who have no interest in employees who help to make the company’s profits. I believe 100 per cent. in all that and endorse it. We must be enlightened. Companies that recognise the value of the people who work for them—the people who create the wealth from which employers derive their profits—are the very ones that invest in their workers, recognise the people who help them and consult them as a matter of course, not because they must do so under legislation but because it is the right thing to do. Therefore, I very much believe that, where abuses exist, they should be exposed, and if it takes legislation to get rid of them, that is exactly what should happen.

Philip Davies: I am very reluctant even to try to suggest that I might disagree with my hon. Friend, but does he agree that the most successful companies in the world tend to have one thing in common—they are very good at looking after their staff and employees—and do not need Government legislation to understand the merits of looking after one’s staff?

Mr. Evans: I find myself in a similar position to my hon. Friend at the beginning of the day, when he felt that our hon. Friend the Member for Christchurch (Mr. Chope) was disagreeing with him when he was not. I was afraid that my hon. Friend would disagree with me, but he has not done so. We all agree, and we all know of examples of firms in our constituencies that are enlightened, value their workers and invest money in their long-term life education in matters that do not directly relate to their businesses.

Mr. Chope: May I give my hon. Friend an example from my constituency, where a partnership whose results are in the papers today—the John Lewis Partnership, coupled with Waitrose—took over the local branch of the Co-op in Christchurch and created a lot more jobs, business and wealth as a result?

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Mr. Evans: If I have read it right in the papers as well, that business is sharing about £180 million with its workers. I do not think that any legislation says that it needs to do that. I hope that I have the figure right. I suspect that anyone who works for the John Lewis Partnership who is listening also hopes that I have got the figure right. Those workers will benefit greatly from the wealth that is being created there.

Stephen Pound (Ealing, North) (Lab): I am extremely grateful to a poor, simple boy from Swansea for giving way. I appreciate that the hon. Gentleman has a vast commercial enterprise in south Wales. He might well be one of the most enlightened and benevolent of employers, but can he not realise that, by speaking of good employers, he is not denying the existence of the bad? What we are talking about today is a critique not of all private equity companies or all employing organisations, but of some of them, and some workers, frankly, need protection.

Mr. Evans: I agree with the hon. Gentleman that we must seek out those employers—I hope that they are a small group, but we have to accept that they exist—who are nasty, who want to pay their workers as little as possible and who give them no rights whatsoever. They are not helping the British economy. They may be trying to help themselves, but they will get that wrong, too. I suspect that the productivity of those who work in enlightened firms is much higher than that in firms where employees are abused.

I hope that when the Minister replies, he will say whether he believes the Bill is necessary at all. We have heard what the CBI said, and what my hon. Friend the Member for Huntingdon (Mr. Djanogly) said about existing protections. I joked with my hon. Friends about the £3 million bus that we discussed last week, which is being used to tell workers about their right to the minimum wage. Perhaps it should be used to tell them about other rights, if those rights have been abused as some hon. Members believe. Perhaps the scheme can be extended to give more information to workers.

I, too, believe in fair play for workers, but we must look at the unintended consequences that the Bill would have. The UK is one of 27 countries in the European Union. We call them our neighbours, laughingly, but they are competitors just as much as they are our neighbours. We must make sure that we do not disadvantage any firms in the UK with legislation that will end both the flexibility that the Government have tried to achieve for them and our competitive advantage. We must recognise the growth of firms in Asian countries. This week, I was fortunate enough to the meet the Prime Minister of Vietnam, which has recently enjoyed 8 per cent. growth. I learned that Vietnam has managed to take more people out of poverty than any other country, and it is important that we acknowledge that.

We have to compete with such countries, but not on conditions. Hon. Members should not get me wrong: it would be awful to think that we could drag the rights of our workers back to the standard that exists for workers in other parts of the world. That is something that we simply do not want to do.

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Philip Davies: My hon. Friend is making a powerful point. Does he agree that we have fairly high levels of rights in this country, and it would be counter-productive to pile more burdens on to businesses, which would stop them investing in UK and lead them to invest in countries such as China, with the consequence that the workers in those businesses would have much lower protection in the workplace than they would in the UK under existing legislation?

Mr. Evans: My hon. Friend makes a valid point: not only would we export jobs but we would abandon the protection for workers in the UK. He, too, made a powerful point, as it is far better to have a job than no job, but that does not mean having a job at any cost.

I take on board what the right hon. Member for Coatbridge, Chryston and Bellshill said about workers’ rights, but that does not mean that people should be in a job and beaten every half hour and given a bowl of rice. That is totally unacceptable, but no one is arguing that that should be the case. [ Interruption. ] Even my hon. Friend the Member for Shipley does not argue that; to suggest otherwise is an abuse of his views. However, he can protect himself far better than I can.

We have spoken about the importance of the number of jobs employing people directly in private equity firms. The UK is one of the world’s financial centres. Time and again, the Opposition are reminded that they opposed the minimum wage, and that all the predicted doom and gloom on the minimum wage has not come about. However, for good measure, may I toss this one back? We were told that if the UK did not join the euro it would be a disaster for our financial institutions. We did not join the euro, and we have some of the strongest financial institutions anywhere in the world. Private equity firms are part of that. The City of London certainly benefits from them, but so too do the regions. I suspect that many people in Scotland work in private equity firms that operate from Scottish cities and towns. Those firms employ people at different levels, and the private equity that they can draw into Scotland benefits that country.

Stephen Pound rose—

Mr. Evans: That leads me nicely to devolution, but before I do so, I shall give way to the hon. Member for Ealing, North (Stephen Pound).

Stephen Pound: I am grateful to the hon. Gentleman for giving way, particularly when he is tossing things in our direction with such frequency. Although I recognise his superiority in that field, does he accept that it would be logical for him, while he is in this laissez-faire vein, to dissociate himself from any suggestion of taxing non-domiciled residents in the United Kingdom?

Mr. Evans: I understand that that is a movable feast as far as the Government are concerned, and I should hate to intrude on private grief. I look forward to 12 March, when perhaps the Chancellor of the Exchequer will finally be able to tell us exactly what is going to happen. [ Interruption. ] He will not be in purdah on 12 March, and I rather hope that he will be able to tell us exactly what is going on. As for non-doms in this
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country, I suspect that what they want is a bit of certainty. They want to know exactly what sort of taxation the Chancellor—he is the person in charge of this—is considering. They want to know exactly what impact the Budget or any announcements that have been made in the past will have on them, just as any workers who would be affected by this legislation will want to know what impact it would have on them.

That brings me back to devolution. As I understand it, the Bill covers the whole of the United Kingdom, so it would be useful to find out the views of the Scottish Parliament, the Welsh Assembly and the Northern Ireland Assembly and whether they would want to have an input into it, deviate from it, or try to have a complete derogation from it. That is where pre-legislative scrutiny would have been interesting.

We have two other private Members’ Bills before us, both of which are cross-party on the basis of their sponsors. If the hon. Member for Nottingham, East thought that his Bill was so good and wholesome, it is a bit disappointing that he was unable to find somebody from another party to share their support for it. I do not know whether he asked any Members from other parties or just asked his mates in order to get the 10 signatures needed to take the Bill forward. I always think that it is somewhat better for a private Member’s Bill, if it is to have any chance of getting through whatsoever, to have not only Government support but the support of the whole House.

I am waiting to hear what the Minister says before I finally decide whether I can support the Bill. I want to see the same sort of protection for all the workers in this country as the hon. Gentleman does, but I do not want to see any unintended consequences that may damage their rights.

1.2 pm

The Minister for Employment Relations and Postal Affairs (Mr. Pat McFadden): I congratulate my hon. Friend the Member for Nottingham, East (Mr. Heppell) on his success in the private Members’ Bills ballot, and on raising the topical issue of takeovers and their impact on employees. He was kind enough to thank me for discussions that we have had, and I am sure that hon. Members on both sides of the House will join me in paying tribute to him for the honest and open way in which he presented the issue. I appreciate his long-standing interest in the condition of people at work. I know that he believes in decency and fairness in the workplace, and that that is the motivation behind the Bill. In particular, he wants to ensure that there is fairness when circumstances beyond the control of the employee change and have an effect on his or her employment situation. My right hon. Friend the Member for Coatbridge, Chryston and Bellshill (Mr. Clarke) spoke with passion about the impact of such change on his constituents.

The backdrop to the Bill is increased public interest in the impact of private equity investments in the economy and, in particular, any impact that they may have on terms and conditions of employment. As a result of the Bill, and the debate, there are several questions before us. Where should the TUPE conditions apply and in what circumstances? If the Bill extends those conditions, would it do only that, or would it do more that that? I fear that in several
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respects it would do more. My hon. Friend the Member for Nottingham, East posed the question whether employees whose company has had a large injection of capital, or has been bought or sold by private equity investors, would benefit from further TUPE protections beyond those already afforded under existing legislation. There is also the legitimate question whether the proposals in this Bill, which allow for extra regulations to govern the process by which companies may be bought and sold by private equity companies, would result in companies being less able to compete and thrive, or be rescued through takeovers, in what is a competitive global economy.

I will return to the Bill in more detail, but I would like to begin by setting out some facts about the current situation in the UK labour market. Over the past decade, our record has been, on the whole, a highly successful one. The UK labour market has become one of the most successful in the world, with more people in work than ever before. Some 2.7 million more people are in work now than a decade ago, and at almost 75 per cent., the UK has the highest employment rate in the G7. The unemployment rate remains relatively low in historical terms, at 5.5 per cent., which is the lowest rate among all our major competitors, except Japan and the US—well below the average for the European Union.

One reason for that success has been the fact that our labour market combines flexibility and decent minimum standards in the workplace, and the TUPE regulations are part of those standards. Other key protections include the minimum wage, paid holidays, anti-discrimination policies and so on. We have introduced that foundation of standards without damaging the economy and without deterring inward investors.

We have an open market economy that allows companies to meet the challenges of globalisation and competition. Over the past 10 years, we have made real progress in maintaining stability and in allowing companies to make long-term decisions while knowing that the economy is run on a stable basis. Even given such national economic stability, there can always be uncertainty in a world where companies are bought and sold, where investment moves across borders and where technology and increasing openness in world economies enables outsourcing and international production processes that would not have been possible even in the relatively recent past.

Whatever the uncertainty, open engagement with globalisation is the approach that will maintain our economic success in the long term. Of course, that approach is not without its challenges. There is a need for the Government to ensure a fair labour market with rules to ensure the decency that has been spoken about, and to guard against the exploitation of the vulnerable. In putting that framework in place, we must ensure that business and enterprise can continue to flourish.

We have to acknowledge that although we hope that businesses will flourish, we know that some will fail. That has always been the case, and we have to support the process of risk-taking and entrepreneurship that is essential to the economy, while always equipping workers to be adaptable and able to cope with change, which is moving at a faster pace than ever before.
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A manifestation of the flexibility that characterises our economy are the dynamic capital markets and investment processes, of which private equity is a relatively small but important part. In introducing the Bill, my hon. Friend acknowledged the valuable role that such investments can have.

The first question is whether the Bill would protect employees in circumstances where private equity has made an investment in the company that they work for. We have heard examples of how employees can bear the brunt of private equity restructuring. Those examples referred to job losses and poorer terms and conditions for employees. That argument—especially in the context of the Bill—contends that that would not happen, or at least that the effects would be minimised if TUPE were extended to those circumstances. However, it is important to remind ourselves what the exact purpose of TUPE is.

The TUPE regulations implement the acquired rights directive and apply when a business or part of a business is transferred from one employer to another. That is the material point—the regulations are about the change of employer. Under the terms of TUPE, employment continues with the new employer, and employees have the same terms and conditions and continuity of service as with their old employer. That is necessary, because without the TUPE provisions, employees whose jobs were transferred from one employer to another would not have an employment contract at all. They would have to go to their new employer to ask for a job. When it comes to share transfers, however, the identity of the employer does not change. The employees’ contract of employment is still valid and cannot be altered without the agreement of both the employee and the employer, exactly as in any other employer-employee relationship.

What, then, of redundancy? Are the jobs of employees who are subject to TUPE always protected in the event of a transfer? As this debate has showed, that is not the case. The TUPE regulations recognise that redundancies in restructuring after a transfer can be necessary for the business. The TUPE regulations allow redundancies to occur for an economic, technical or organisational reason, or for reasons unconnected with the transfer. Restructuring can occur if it would make a business more attractive for sale, for example. What TUPE ensures is that length of service is taken into account should employees be made redundant for an economic, technical or organisational reason. As employees have a contract in the case of a share transfer, their length of service is recognised already, so they would not need the extra provision.

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