Memorandum submitted by Institute of Directors (E&S 13)

 

As I mentioned in today's hearing on the Education and Skills Bill, I am keen to ensure you have the full workings for the Institute of Directors' (IoD) position on the considerably larger regulatory impact we believe the Bill will have if an obligation to check the status of 16-17 year olds is retained.

 

For Clarity:

 

1) The IoD believes that the cost of the obligation on employers to check the status of 16-17 year old employees has been underestimated by as much as 8 times.

2) The IoD believes that the removal of this obligation on employers would not affect the policy outcomes of the Bill and would present significant savings for business.

 

Key Facts:

 

71% of IoD members' organisations are small and medium-sized businesses

74% of IoD members with less than 50 employees have no HR support

 

Cost of Employer Checking:

 

Professor Alison Wolf's document 'Diminished Returns' asserts that rather than Government projections of 10% of the cohort being affected by the proposals, the figure is plausibly as high as 20%.  On this projection the figures quoted in the Government's Impact Assessment for 'Employer Checking' will be increased from 8.4M to 16.8M.

 

Government figures estimate that the process of employer checking (as above) is a single exchange of paper between an employee and employer, which will take ten minutes and therefore cost (on Wolf projections) 16.8M.  In reality this process will actually require a mixture of discussion, checking, altering of work rotas and/or addressing employees' needs.  As a result the IoD also believes that the time needed for this process is much more likely to require at least 20 minutes of an employer's time, doubling the figure to 33.6M.

 

Lastly, Government estimates have not accounted for the significant guidance that will be necessary for employers on this policy and having read the recent 29 page document produced by the DCSF entitled "Raising Expectations: staying in education and training post-16" (this took me 17 minutes to read) the 20 minutes of employers' time conservatively attributed to this process doubles our 33.6M figure to 67.2M.

 

To contextualise this point, the IoD notes that this amount of administrative regulatory burden would if implemented today account for a 32% 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% the figure has not been accounted for in the department's annual Simplification Plan.  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.

 

Removing the Requirement to Check:

 

The IoD believes that the above costs can at least be halved by removing the requirement to check an employee's enrolment within education.  We are happy to elaborate further on the matter, but as I explained in the Committee Hearing today, the IoD believes that the proposed system of checking serves little to no purpose because of the relative vacuum in which it sits.  If the commitments that the IoD have been given regarding light touch enforcement of this Bill are also true, then this administrative process serves no purpose for employee, employer or local authority at all.

 

The IoD welcomes the attempts that have been made to reduce the impact of this policy on employers since it was consulted on last year.  However, the IoD recommends that the Bill be amended to simply place a duty on employers to release a 16-17 year old employee for the equivalent of one day a week, but that administration of this activity need not be so heavily prescribed.  The IoD believes that if the requirement on employers to check the status of their 16-17 year olds enrolment were removed this would save businesses substantial sums of money (see above) and not affect the policy outcomes and objectives at all.

 

January 2008