Clause
21
Appropriate
arrangements to be in place before employment
begins
Mr.
Hayes:
I beg to move amendment No. 31, in
clause 21, page 11, line 27, at
end insert—
‘(4) The
Secretary of State shall, within 12 months of the coming into force of
this section, publish an assessment of the implications of the duty
imposed by this section on the employment prospects of 16 and 17 year
olds.’.
The
Committee has become accustomed to me speaking to amendments in the
context of the explanatory notes. Indeed, perhaps people are grateful
to me because it saves them trawling through their own papers. The
explanatory notes state that clause 21
“places a duty on employers not to
employ a person unless they have taken reasonable steps to check that
the person has made appropriate arrangements to participate in relevant
training or education. For example, an employer would check that a
potential employee could produce a letter from a learning provider
indicating that he or she had enrolled on a course. It provides for an
exception to this if the contract is made conditional on the person
making arrangements to undertake appropriate education or training, in
which case they must have
done so before employment commences. This enables an employer to have a
role in a young person’s decision about the type of education or
training to pursue.” The amendment suggests that
within 12 months of this coming into force, the Secretary of State
will
“publish an
assessment of the implications of the duty imposed by this section on
the employment prospects of 16 and 17 year
olds.”.
The
reason for the amendment is that there is considerable doubt about two
things, which we heard expressed very clearly in the evidence sessions
by both the Institute of Directors and by the academics who came to
visit, notably Professor Alison Wolf. The first issue is that of the
cost to employers of this business, which, in their judgment has been
underestimated by the Government, and I shall return to that in a
moment. The second problem is the potential effects on the employment
of 16 and 17-year-olds. Alison Wolf was outspoken on that subject. She
said that she thought that a typical employer would resist employing 16
and 17-year-olds as a result of the legislation, because they would
bring with them the additional burden and responsibility of training or
education.
The cost
of employer checking is much higher in the IOD’s estimation than
the Government assume. The IOD
says:
“Government
figures estimate that the process of employer checking is a single
exchange of paper between an employee and employer, which will take ten
minutes”
and would
therefore cost £16.8 million nationally.
“In reality this process will
actually require a mixture of discussion, checking, altering of work
rotas and/or addressing employees’ needs.”
The IOD projects that it will cost more
than double that figure—its top estimate is that it could cost
up to £68 million per year. The administrative burden also
accounts for what it calculates to be a 32 per cent. hike in the
Department’s imposition on business. That is entirely contrary
to current Government policy that the Minister has articulated of
reducing the administrative burden on business by 25 per cent. The
consequential, unintended impact of the clause could be that employers
only employ people older than the proposed compulsory
age—precisely Alison Wolf’s argument.
That is
especially true in the case of small and medium-sized businesses. I
suspect that very large organisations, as so often with bureaucratic or
administrative burdens, have the capacity to absorb the extra costs in
a way that small businesses do not. For example, a small training
business that employs a 17-year-old to work in numerous different jobs,
will spend less time on tasks such as marketing and business, and more
on burdensome administration. Therefore it is important that we review
the impact of the clause after 12 months. We must find out whether the
Minister is right, and the Government’s estimates are borne out,
or whether the IOD and Alison Wolf are more accurate in their
estimation of the detrimental effect on the employment of young people,
and on the cost of businesses in respect of checking their new
obligations. The amendment does just that, and I hope that the Minister
will accept it in the spirit in which it is
offered.
Mr.
Laws:
The hon. Member for South Holland and The Deepings
has raided and shortened my speech not only by reading out part of the
explanatory notes, but
by covering large chunks of the notes from the Institute of Directors on
the issue. Therefore, I wish not only to speak on the clause and the
amendment but also to seek some guidance from you, Mr.
Bercow, as to whether it would be acceptable for me to make all my
comments on the clause within this debate—you know that I tabled
an amendment to delete the clause—or whether you would rather
have two debates on
it.
The
Chairman:
I am grateful to the hon. Gentleman for
seeking guidance. We do not want to end up having two clause stand part
debates. Although he might be seeking to be helpful by confining his
remarks to one speech at this stage, that of itself is not sufficient.
Others may wish to speak in a clause stand part debate subsequent to
our consideration of the amendment. Therefore, I urge him, despite his
good intentions, to stick to matters that are directly relevant to
amendment No.
31.
Mr.
Laws:
Thank you, Mr. Bercow. In that case, I
shall save the bulk of my comments for the debate on clause
21.
I have some
sympathy with the amendment tabled by the hon. Member for South Holland
and The Deepings. If pressed, I would even vote for it, but my concern
is that, while it would provide us with useful information about the
consequences of the clause, it would not actually prevent damage. It
would look back at the situation from a retrospective position in the
future when some of the damage that the hon. Gentleman said the clause
could do to the youth labour market and to employer costs would already
have been incurred. We have concerns about the Bill, and we are
supportive of the amendment, but we believe that it does not go far
enough in hampering the Government in their efforts to increase the
burden on employers and to risk damaging the youth labour
market.
Jim
Knight:
I shall reserve my response to what the hon.
Member for South Holland and The Deepings said about the IOD analysis
for the stand part debate and simply direct my remarks now to whether
there should be an assessment published within 12 months of the
measures coming into force. I will pass over my concerns about around
publishing or carrying out the survey within 12 months because I accept
that the hon. Gentleman is trying to make a
point.
We
will, of course, continue to assess the implications of our policy in
conjunction with other Government Departments once the provisions come
into force. My Department already produces a statistical first release
each year which provides information on the youth labour market broken
down into various dimensions such as employment, unemployment,
inactivity numbers and the education and training status of young
people. For the past three years, there has also been a more
comprehensive review of the youth labour market and its interaction
with the education and training market. It is part of cross-Government
work with the Department for Work and Pensions and the Department for
Business, Enterprise and Regulatory
Reform.
Mr.
Hayes:
Will the Minister give
way?
Jim
Knight:
In one
second.
A range of
analyses of the youth labour market and the implementation of the
raising of the participation age will be carried out by my Department
and other Government Departments as we move toward 2013 and beyond. I
therefore do not consider it necessary to set out a requirement in
primary legislation, but I reassure the hon. Member for South Holland
and The Deepings that it is our intention to carry out reviews such as
those he seeks in the amendment. On that basis, I hope that he will
withdraw the
amendment.
Mr.
Hayes:
I am glad that the Minister prevented me from
intervening, because I would have anticipated his words. He seems to
have offered this anyway, but I was going to ask him to ensure that the
sentiments expressed in the amendment were reflected in the reviews and
reports. I think that he has given assurance that that is likely to be
the case. Frankly, if it were not, organisations such as the IOD would
do their own survey and publish it anyway, so I suspect that it is in
the Government’s interest to do so. On that basis, I am happy to
beg to ask leave to withdraw the amendment.
Amendment, by
leave,
withdrawn.
Question
proposed, That the clause stand part of the
Bill.
6.30
pm
Mr.
Laws:
We wish to delete the clause from the Bill because
of concerns that have been aired earlier in our debates and that were
aired by some of the witnesses in oral evidence. Our concerns is that
the proposals in the clause and the other clauses associated with it
will add quite a burden to that already placed on the business
community, particularly smaller businesses.
As the hon. Member for South
Holland and The Deepings acknowledged, this section of the Bill could
seriously damage the youth labour market and raise unemployment rates
for young people aged 16 and 17. We argued earlier that there are many
young people for whom being in employment is extremely valuable and is
often a better alternative to being in formal educational or training.
Whether what they learn is accredited or not, it will often be of great
value—sometimes, arguably, of greater value than the formal
accreditation that would be required under the Bill.
The Institute of Directors gave
evidence on this issue and indicated that while it was willing to
accept the Government’s desire to ensure that young people aged
16 and 17 in employment were undertaking some type of education and
training, it wanted the duty to be placed on young people themselves to
take up that education and training option. It did not want the burden
of checking to be placed on employers. As it is, the Bill describes a
double duty: a duty on the young person himself or herself to be in
appropriate education and training even if he or she is in employment,
and another duty on the employer to check. Although in theory that
sounds quite simple——the Government have come up with a
low estimate in the regulatory impact assessment of the additional cost
on business—the cost could be a great deal higher.
The hon. Member for South
Holland and The Deepings has already referred to some of the concerns
that Alison Wolf and the IOD aired about the
Government’s assumptions and, in particular, their concern that
the size of the cohort affected by the proposal may be larger than the
Government expect, particularly if we do not make the expected progress
on participation between now and 2013 to 2015. The actual process of
checking and the amount of time involved could also be longer than the
Government assume, and there will be a requirement on employers to
understand the guidance here, particularly given that there are
penalties which can be used against employers if they do not comply
with this section of the Bill. As a consequence of having to
process and understand that guidance, the cost could also rise. The IOD
has therefore estimated that the Government’s original figure of
£8.4 million for the regulatory burden could increase, because
of those three factors, to a much larger figure of around £67
million. In the briefing note they prepared for the Committee and
circulated to many Members, it says:
“this amount of administrative
regulatory burden would if implemented today account for a 32 per cent.
hike in the DCSF's imposition on business. Since the policy
implementation will take place beyond the date of the present
Government's activities to reduce administrative burdens by 25 per
cent. the figure has not been accounted for in the department 's annual
Simplification Plan.”
It
adds:
“However, it is worth
noting that if IoD projections are correct, all the Government's
activities to reduce the burden of regulation on business within the
DCSF's arena would be invalidated and indeed reversed by this single
policy.”
What is being
suggested here does not go as far as I would want to go in removing the
duty entirely from the Bill and allowing young people who are in
employment not to be in formal accredited education and training. The
idea of the proposal to delete clause 21 and that of the IOD is not
that young people in employment aged 16 and 17 should not be doing some
sort of formal education and training, but that the burden of them
doing so and complying with it should be on the individual and not on
the business. If that were the case, the regulatory costs for business
would be far lower than those estimated by the Government and some of
the business organisations. Even more importantly, some of the concerns
of the business community about being caught out employing 16 and
17-year-olds who are not in education or training would be
significantly ameliorated. Therefore, the potential damage to the
global market from the measures in the Bill could be considerably
lessened. That seems to me to be the really important
prize.
We should not
end up inadvertently taking away employment opportunities for young
people that may be more valuable for some than the accreditation that
they can achieve elsewhere. My real fear about the clause and other
clauses associated with it is that employers will say simply that there
is too much uncertainty because of the administrative burden: because
of the requirement to police the time and ensure that young people are
in education and training; because of complexities that could arise
when an employee joins at a mid-point through the year; and because of
the issues that may arise if a young person finds themselves on a
course that folds and has to identify another course to join. All those
things make businesses worry about whether they can trust what young
people tell them and whether they will essentially carry the can if
everything goes wrong.
We would therefore like the
clause deleted. I can see that I have not completely persuaded the
Minister as yet, but I hope that he will reflect further during the
debate. We would like him to keep his education and training obligation
in the Bill, if that is what he wants to do. It is not what we want him
to do, but he may still do it. However, we want him to take the
responsibility off the shoulders of employers and make this a duty on
young people. That would help not only employers, but far more
importantly, it could help young people whose prospects will be so
badly damaged if the employment consequences of these clauses are
underestimated, as we think they
are.
Mr.
Hayes:
I have just a word on the stand part debate. I
think that the point made by the hon. Member for Yeovil is worth
amplifying. It is entirely possible that a perverse, unintended
consequence of the legislation will be to see more young people in
training, but fewer in employment. That is not the Government’s
intention and is certainly not the wish of any member of the Committee,
but it could happen. There is no comfort in moving from being a NEET to
being a NIJIT—not in a job, in training—and we could see
the birth of NIJITs as a result of the
Bill.
The Government
need to give this matter much more consideration. I would like the
Minister to consider modelling it more carefully. There certainly needs
to be a better dialogue with industry, given what we know the
representatives of the small businesses, through the Federation
of Small Businesses, and the larger companies, through the IOD and the
CBI, are already saying. That cannot be dismissed entirely. I do not
necessarily buy Alison Wolf’s argument, but I think that it is
worth listening to and that it should be taken into
account.
In your
wisdom, Mr. Bercow, you did not call amendment No. 32, which
was tabled by me and my hon. Friends. That is your privilege. However,
in our judgment, the Bill places too little emphasis on in-house
training that leads to accreditation on the part of business. The
clause is relevant in that regard. These two things are not unrelated.
It is more likely that a small or medium-sized business will take on a
very young person if it is already training people in-house in an
entirely wholesome and rigorous way, leading to accepted,
industry-recognised qualifications. That is less likely if it feels
that it has to take on a burden with which it is unfamiliar. Again,
will the Minister reflect in respect of the clause on placing greater
emphasis on high quality, in-house training and partnerships between
business and the FE sector in delivering a mechanism to ensure greater
skilling of young people that is attractive to small and medium-sized
enterprises, in particular? It is high time in this House that we made
a case for our small and medium-sized businesses just as it is high
time that we made a case for British manufacturers who do so much. I
met some last night, and I promised them that I would raise their case
here today. I agree with their argument that we should shout for them
more often and more loudly, which is why I am doing just that. There is
a lot to be said for British manufacturers and British SMEs. We should
celebrate their work and, by reflecting on the clause, perhaps the
Minister can illustrate that he supports me in that
endeavour.
Jim
Knight:
Labour Members will continue to shout for British
manufacturing in the same way that we shouted for it throughout the
1980s when so much damage was done by the Government of the day. In the
spirit of invest to save, I look to save on this occasion by not
repeating my arguments when rebutting Alison Wolf’s comments
with which I entertained the Committee in some form or another on the
afternoon of 5 February. They should be taken as read. I hope that it
helps the hon. Member for South Holland and The Deepings if I say that
in-house training that is accredited will certainly count in respect of
fulfilling
duties.
We
have said that we want duties on employers to have as light a touch as
possible, and that the primary responsibility for participating will be
with the young person. However, employers do have an important role in
supporting young people to fulfil their responsibility, which is why if
employers want to take on a young person for more than 20 hours a week
in a situation when they are not providing their own accredited
training, the young person will need to provide evidence that they have
made arrangements to attend training or education before they can start
employment. The employer will simply need to check that before allowing
the employment to begin. If he does not, he will be failing to meet his
duty. Employers will not be required to do anything further, such as
calling the college to check that the young person was enrolled there
nor would they have an ongoing duty to check that they were attending
the course. As we have discussed, employers would not have to check the
number of hours.
The
Institute of Directors states that, in its view, fulfilling the duty to
check would in each case take 20 minutes rather than the modest average
time of 10 minutes for which we have allowed. As someone who has
previously run a small business, that is not credible. All we are
asking employers to do is look at the proof the young person provides,
probably in the form of a letter that accepts them on a course in which
they have made arrangements to participate. That need not be a process
that is separate from the other checks that take place on commencement
of employment such as eligibility for work, provision of a national
insurance number, perhaps a P45, bank details and all the usual things
that we go through when we commence
employment.
Mr.
Laws:
Will the Minister explain why it is important that
employers should play a policing role? He said that he wants employers
to support young people. They are not arguing against that, but against
taking on a policing role. Why is that role
necessary?
Jim
Knight:
The extremely modest policing
that involves simply making a check lasting a few minutes at the
commencement of employment about whether the person is enrolled on an
appropriate course is just a way to ensure that those who are in jobs
without training move into training in employment. It is another lever
that is at our disposal as we design the
system.
The Institute
of Directors estimates that a further 20 minutes would be required each
time a new young person is employed to read the guidance that we shall
issue to employers. Bizarrely, it seems to think that employers would
need to read the guidance each time
that they take on a young person. That is not credible. When developing
guidance, we shall want to consult organisations such as the Institute
of Directors. No doubt, it will take issue with guidance even of the
admirable brevity of some of our policy booklets or even this speech,
but we shall certainly aspire to keep something brief and to the point.
I reassure the Committee that we took the time needed to read and
assimilate guidance when we made our assessment of an average
of 10 minutes needed to carry out the
check. I
do not accept that the duty to check is a significant burden. It is a
necessary duty to place on employers. Without it, employers
could—either knowingly or unknowingly—employ young people
who are not participating, and thereby collude inadvertently in a young
person’s failure to fulfil his or her duty. With the duty to
check, there is an incentive for young people to make arrangements to
participate before looking for a job, because they know that they will
need to provide proof before they can start work. Not having duties on
employers would seriously disrupt the balance of roles and
responsibilities which is fundamental to raising the participation age
successfully.
6.45 pm
Question put, That the
clause stand part of the
Bill:—
The
Committee divided: Ayes 8, Noes
6.
Division
No.
19
]
Foster,
Mr. Michael
(Worcester)
Question
accordingly agreed to.
Clause 21 ordered to stand
part of the Bill.
| 
