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Julian Smith: We are hearing a load of bluster and rubbish from Opposition Members. This is a balanced measure that puts a bit more power in the hands of those who will create new jobs in this country. The shadow Minister was an employment lawyer; every member of the Opposition Front-Bench team was a business owner. They are being hypocrites about the clause.

Mr Speaker: Order. The hon. Gentleman must withdraw his use of the word “hypocrites” in relation to Members of the House. Perhaps he will be good enough to withdraw the remark and apologise.

Julian Smith: I do withdraw it and apologise, Mr Speaker.

Mr Speaker: Thank you. I am grateful.

Jo Swinson: Thank you, Mr Speaker. I think it is fair of my hon. Friend the Member for Skipton and Ripon (Julian Smith) to point out that many business owners are genuinely concerned about how employment law currently works.

Mr Umunna: The Minister has indeed been incredibly generous about giving way. For the record, Mr Speaker, I think it is of assistance to have a range of experience in this House. We have lawyers and many business owners in the shadow BIS team and we speak with the benefit of professional experience.

Does the Minister not acknowledge that employers can have these conversations with employees, as long as they follow fair procedures? That is all we are asking for.

Jo Swinson: The procedures are far more likely to be used by large companies, and many business people, particularly those in small and medium-sized enterprises, fear to take them up. That was borne out by much of our consultation, both formal and informal. I do not know whether Opposition Members genuinely believe that there is no concern among business about tribunals and employment law—

Mr Umunna indicated dissent.

Jo Swinson: Well, people watching this debate or reading it in Hansardwill see that that concern among businesses exists and is not being taken seriously by the Opposition, but I shall be happy to be corrected.

Mr Umunna: The Minister knows full well that, for example, we welcomed the setting up of the Underhill review, because we acknowledge that there are issues, but it is really a question of degree. Of course we have to take into account the concerns of business, but our job as politicians is to take into account the concerns of society as a whole and to balance the different interests, and that is what she has got wrong.

Jo Swinson: I agree that the job of politicians is to balance those interests, but I disagree with the hon. Gentleman that we do not have the right balance. As hon. Members have pointed out, very different proposals emerged from some quarters, but the Government have said firmly that we will not go ahead with the no-fault dismissal plans that were put forward. That shows that we are taking a balanced approach.

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Catherine McKinnell: I thank the Minister for giving way again. She has talked a lot about fear. It may well be the case that some businesses fear an employment tribunal, but what about evidence? My hon. Friend the Member for Oldham East and Saddleworth (Debbie Abrahams) asked where the evidence was for the view that the measure would aid economic growth and the creation of jobs. I, for one, have yet to see any evidence. I hear only rhetorical references to fear.

1.30 pm

Jo Swinson: I encourage the hon. Lady to speak to employers in her constituency about the issue, which is raised frequently. As to evidence of employers’ fears of employment tribunals, let us look at the previous Government’s record in office. The fear of employment tribunals can put people off employing staff. If people are more likely to employ staff, they are more likely to grow their businesses and create wealth for this country. But let us look at the record of the Opposition. In 1998 there were 90,000 claims going to employment tribunals. By 2010, despite the measures that the Labour Government apparently took to try to improve that situation, the figure was 236,000—a huge jump in the number of tribunals, which of course has created a concern for businesses.

Catherine McKinnell: I would be interested to hear the Minister’s analysis of how many of those employment tribunal cases were equal pay claims that were rightly going through the tribunal system. On the evidence, or the apparent lack of evidence, about the genuine fear of employment tribunals, I wonder whether the hon. Lady is in fact making a case for better business support, rather than legislating to make it easier to sack people, which seems a little counter-productive to growth.

Jo Swinson: This is not about making it easier to sack people. This is about making it easier for people to come to a mutual agreement, which is, by definition, not sacking.

Richard Fuller (Bedford) (Con): May I offer my hon. Friend some reassurance that she is charting a middle course? She has heard the concerns of the lawyers on the Opposition Benches who, instead of recognising that our business leaders are going out every day to do the best they can for their employees, assume that they need to be corralled and controlled. There are Members of the House who would like to see the Minister go further in her measures in the Bill to make it easier for business leaders to hire more people so that the current recession becomes a job-filled rather than a jobless recession.

Jo Swinson: I think I thank my hon. Friend for his intervention. The fact that there is criticism from both sides shows that a balanced approach is being taken. I shall make progress as I know that other Members want to speak.

Ian Murray: I am grateful to the Minister for allowing me to intervene. Let us nail once and for all the myth about employment tribunal claims. The Government used this as the supposed evidence for changing a range of workers’ rights. The massive increase in employment

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tribunal claims arises from multiple claims, which have risen substantially, but the individual number of multiple claims has stayed exactly the same for the past three or four years. Indeed, employment tribunal claims are dropping.

Jo Swinson: The fact remains that there is a massive backlog of employment tribunal claims, there are massive problems with the way the system is working, and there is significant concern in the business community, which has been expressed in the House and in Committee. I shall move on to the other amendments before allowing other Members to have their say.

Government amendments 11 to 15 to clause 13 will ensure that the power in the Bill to amend the unfair dismissal cap cannot be used to introduce a cap based on an individual’s pay without there also being a specified upper limit. My hon. Friend the Member for North West Leicestershire (Andrew Bridgen) raised a concern in Committee that, as it stands, the power in clause 13 could be used to introduce a pay-based cap with no upper limit. Clearly, such a step would increase potential compensation for the very highly paid and could thereby increase risks and uncertainty for employers. As my hon. Friend the Member for North Norfolk who is now the Minister of State, Department of Health, made clear at the time, this is not the Government’s intention. On the contrary, we are seeking to give employers greater confidence in dealing with disputes and to ensure greater realism about the level of awards in order to encourage settlement.

We launched a consultation on proposals to change the cap on compensation for unfair dismissal on 14 September, alongside our consultation on settlement agreements. The consultation includes looking at the overall level of the cap and also the option of introducing a pay-based cap alongside a specified upper limit. We therefore seek to make these amendments to ensure that the power in clause 13 reflects the Government’s policy intentions.

Opposition Members have proposed three amendments to this clause, the first of which, amendment 82, would delete the clause in its entirety. It has been a matter of common agreement for many years that the compensatory award should be subject to an upper limit. What that limit should be is the issue in question. This clause recognises the agreement that exists about the need for an upper limit, but provides a power for the Secretary of State to vary that limit subject to specific considerations. As I have said, we are consulting on what the appropriate limit should be. I am therefore unable to accept the amendment.

Amendment 70, tabled by the hon. Member for Hayes and Harlington (John McDonnell), seeks to remove the upper limit of three times median salary. The effect of this would be to allow the cap to be set at any amount. This would clearly run counter to the objectives that I set out a moment ago of greater confidence for business and greater realism for claimants. The hon. Gentleman tabled a further amendment to the clause, amendment 71, which would require the Secretary of State to consult the TUC and the CBI before deciding on a figure for median annual earnings where the figure published by the Statistics Board is more than two years old. I cannot envisage a situation in which such information would not be produced by the ONS in any two-year period

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but, should such an eventuality ever arise, the Secretary of State will be under a duty to act reasonably and rely upon relevant information. The Secretary of State and other Ministers meet the TUC and CBI regularly to discuss a range of matters, so there is little to be gained from placing a requirement to consult the TUC and the CBI on the face of the Bill. I am therefore unable to support either of the hon. Gentleman’s amendments.

I turn now to the amendments to clause 14 tabled by my hon. Friend the Member for Bedford (Richard Fuller). Amendment 58 would delete clause 14 in its entirety. Amendment 59 seeks to restrict the imposition of a financial penalty to those businesses employing more than 10 people—that is, to exempt micro-businesses. I want to make it clear, as did my predecessor in Committee, that the introduction of this discretionary power for tribunals is not intended to penalise employers indiscriminately. It will be used only when an employer has breached an individual’s employment rights, and when that breach has been accompanied by aggravating features—for example, where there has been a deliberate decision to act in a way that breaches the employee’s rights, or where the same employer repeatedly acts in an unlawful manner.

When we first proposed the introduction of financial penalties, we had thought to make the imposition of the penalty automatic when there was a finding in favour of the claimant, but we listened to the concerns expressed by business during the resolving workplace disputes consultation last year and revised our proposals to give the tribunal discretion to decide when a penalty was appropriate. Good employers—those who try to do right by their employees—have nothing to fear, regardless of their size. A genuine mistake will not be grounds for the imposition of a penalty. However, those businesses which the tribunal considers have acted deliberately or maliciously will rightly, I believe, face the prospect of a financial penalty. They will no longer be able to gain a competitive advantage over businesses that abide by their obligations.

I cannot stand here and defend bad employers. I recognise the good work that my hon. Friend the Member for Bedford has done to support the interests of small businesses, and I am sure he does not want to defend bad employers either. I hope he will not press his amendments, as the Government are unable to support them.

Richard Fuller: Of course I do not wish to defend bad employers but as the Minister knows, almost all employers are good employers who do the right thing. Will she address the general principle, which is not so much about the points that she mentioned? Why are the Government trying to get in on the financial action? This is about money that will go to the Government. It is nothing to do with the relationship between the employer and the employee. The money will not go to the employee. Why is it so important that the Government get their take?

Jo Swinson: My hon. Friend is right to point out that the majority of employers are good employers. I am sure hon. Members in all parts of the House find that to be so when they visit local businesses in their constituencies. Even in the case of good employers, a mistake will

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occasionally be made and they will end up at a tribunal. That is why, in response to the consultation, we removed the automatic imposition of a penalty. Any penalty will be based on the circumstances of the case and will be imposed by the people who have heard all the facts—the tribunal. It will be imposed only on employers who have deliberately flouted the law or done so in a malicious or aggravated way.

On the point about financial penalties, this is not some kind of revenue-raising scheme; it is about ensuring that the right incentive structure is in place by creating a further penalty for businesses that deliberately flout the law. That will incentivise the right kind of behaviour. For the reasons I have just outlined, that will be fairer on the vast majority of businesses that are good employers and that should not lose out to those employers that gain some kind of advantage by treating their employees badly.

Richard Fuller: The Minister again mentions an additional penalty for those employers. Is she aware that the Law Society has stated:

“Uplifts on compensation of up to 25% are already available in cases of unreasonable breach of the Acas Code on Disciplinary and Grievance Procedures”?

Is that not a sufficient additional penalty?

Jo Swinson: I do not believe that what we have at present is sufficient. Although they make up a small portion, there are clearly too many employers who do not comply properly with their obligations. I think that it is quite right that we send a clear signal and make it clear that those employers can expect to face a bigger consequence at a tribunal than those well-intentioned employers who try to do the right thing but fall foul of the law because of an error—after all, we are all human.

Opposition Members also seek to amend clause 14. Amendment 92 seeks to address the issue of non-payment of employment tribunal awards by proposing that an employer should pay a penalty for each period that an award made in an unfair dismissal case goes unpaid. I recognise, and indeed sympathise with, the amendment’s aims, but I am afraid that it would not have the intended effect. When I took over this brief, I was genuinely shocked by the level of employment tribunal awards that are unpaid. The figures for 2009 show that six months after an employment tribunal makes an award as many as 40% of claimants had not received the money they were rightly due, which is clearly unacceptable.

Whatever people’s views on the rights and wrongs of the employment tribunal process and how it could be improved, when an employment tribunal grants an award and the case has been heard properly, the claimant should be able to get their money. Like my predecessor, I am very concerned at the figures for non-payment. When a tribunal finds in favour of a claimant, it cannot be right that they are unable to get the money they are owed.

We are consulting on two changes that I believe might have some effect on the number of awards paid promptly. They include proposals to put a date on a tribunal’s judgment specifying when payment should be made and to charge interest from the date of judgment where an award is unpaid after 14 days. These charges will apply to all cases, not just to unfair dismissal cases. Importantly, in that scenario the interest will be added

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to the award and paid to the claimant. That consultation closes on 23 November and I encourage the hon. Members who have tabled amendments to take part and feed in their views.

I want to consider what more we can do on this issue. I have already discussed it with my colleague and fellow Minister for Equalities, the Under-Secretary of State for Justice, my hon. Friend the Member for Maidstone and The Weald (Mrs Grant). We are both clear that action is necessary, but we cannot take action without first understanding the underlying problem properly. The previous Government attempted to resolve the problem by introducing a fast-track enforcement process, but it still persists. The process had some success, but not enough people have been accessing it and, even for those who have, it has not been successful in all cases.

I have therefore commissioned research from the Department on the reasons why so many awards go unpaid. Once we have that information, which I anticipate will be early next year, we will be able to take whatever steps we can to ensure that claimants receive the award they are entitled to. Therefore, I ask my hon. Friend not to press the amendment and I commit to taking the proposal away and considering it further to see what we could do in the light of the research findings.

Tom Greatrex (Rutherglen and Hamilton West) (Lab/Co-op): I raised with the Minister’s predecessor the case of a constituent who found herself in that situation. She was, in effect, dismissed for being pregnant and was awarded £24,000 by a tribunal but to this day has still not received any of it. In the issues the Minister is considering, in the consultation and in the wider concern she has expressed about how we can best address this, will she also seek to work with colleagues across the Government to look at companies that change their status in order to avoid paying out awards when cases are brought against them?

Jo Swinson: I do not know the details of the case the hon. Gentleman describes, but I am more than happy to look into it. Given that he was in contact with my predecessor, I am sure that the information will be available in the Department. I think that we need to look at the whole range of issues. There is clearly a range of reasons why an award would not be paid, and they might all require different solutions. If a company has become insolvent, for example, there is a different set of problems than if companies are simply choosing not to pay. Trying to understand where exactly the problem lies is the first step towards ensuring that we can tackle it properly, because I agree that cases such as the one he outlines are unacceptable.

1.45 pm

Amendments 72 and 83 seek to remove the limitations we have proposed for any penalty. Amendment 72 would remove both the upper limit of £5,000 and the requirement that the penalty should be equal to 50% of the award, effectively allowing the tribunal to impose a penalty of any amount above £100. As we have made clear, the objective of the financial penalty regime is to encourage employers to have greater regard to their employment obligations without introducing an additional burden that would undermine their confidence to take on staff. Employers facing an unlimited fine are more likely to feel compelled to settle claims that they might otherwise

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have defended and won, which is not necessarily in the interests of justice. The amendment would also allow the tribunal to impose a penalty where it subsequently awards compensation for a failure to comply with an earlier order or recommendation, opening up the possibility of employers being fined twice for the same breach.

Amendment 83 would preserve the upper limit of £5,000 but seeks to remove the cap that restricts the penalty to 50% of the award, thereby allowing the tribunal to impose a penalty of any amount between £100 and £5,000, the minimum and the maximum. Removing the 50% cap would remove some of the certainty that businesses have over potential liability if the matter goes to a hearing and, as a consequence, might affect their decision to defend a claim. This is a new measure that the previous Government did not think to try. We believe that it will have a positive impact, but we of course need to see how it works in practice. If the amount of the fine proves insufficient to encourage greater compliance, or indeed if it has a detrimental effect on businesses defending a claim, we have the power to vary the limit by secondary legislation and we will use it.

Debbie Abrahams: Will the Minister tell us what the evidence is for those caps?

Jo Swinson: As I have said, this is a new measure and these are the figures we have put in place. I do not know what figures the hon. Lady thinks should be set. It is important that there is some certainty for businesses and so, after progressing with this measure and putting it in place, we can then review it and see how it works. By ensuring that the specific amount is not set in primary legislation, we will have the ability to amend it through secondary legislation, which will give the required flexibility. Amendments 72 and 83 would undermine the objectives of the financial penalty regime and so I am unable to accept them.

The final amendment to clause 14, amendment 73, tabled by the hon. Member for Hayes and Harlington, seeks to specify the purpose for which any moneys accruing to the Exchequer from the imposition of financial penalties should be used. Hon. Members will know that the Government already fund the activities to which the amendment refers through ACAS, with an annual grant in aid allocation of about £45 million a year. As my predecessor made clear in Committee, the purpose of the financial penalty is not to raise revenue for the Exchequer. It would not be appropriate to expect ACAS to function with some element of its annual funding being dependent on what is ultimately a discretionary decision by a tribunal. The existing mechanism for funding ACAS is the right one, so I am unable to accept the amendment.

Amendment 94 seeks to address a point we covered in Committee. I understand that its aim is to prevent a disclosure relating to a breach of a private contract from being a qualifying disclosure for the purposes of a whistleblowing claim, unless it is clearly in the public interest. My predecessor, my hon. Friend the Member for North Norfolk, explained in Committee our reasons for not wanting to take that route. We believe that such an approach would have the potential for unintended consequences and would not in itself address the concerns raised by the Parkins v. Sodexho decision. For example, the issue in that case could have been reframed as a

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health and safety issue, with similar issues then arising in relation to the disclosures of minor breaches of health and safety legislation, which are of no interest to the wider public. Not only are we closing the loophole identified in the Parkins

v.

Sodexho case, but by introducing the public interest test we are removing the potential for the opportunistic use of the protection. That will prevent any cases similar to the Parkins

v.

Sodexho case in the areas that would otherwise be uncovered by the amendment.

Ian Murray: I am grateful to the Minister, who is being incredibly generous in giving way. What would she say to the Law Society, which says that the clause will not do what the Government intend it to do?

Jo Swinson: I think that it will do what the Government intend it to do—basically what it says on the tin. It is about making sure that the public interest disclosure regime has to have a public interest test. That is what was meant when the legislation was initially framed and formed. The case law that has come up since then has showed that there was a loophole, and I think, to be fair, that the Opposition have accepted that it needs to be closed.

Following my discussions with the hon. Member for North Ayrshire and Arran, the House may wish to be aware of the steps that the Government are taking in the NHS to encourage whistleblowers. As I said during the recent debate on the issue, the Government fully support the rights of NHS staff to raise concerns in the public interest. That right has been enshrined in the NHS constitution and further strengthened through changes made to the constitution and the handbook in March this year. The Department of Health is continuing to build on the rights set out in the Public Interest Disclosure Act 1998 further to highlight the statutory protections available for those who raise concerns. I want to stress that the Government fully support genuine whistleblowers and want to encourage individuals to bring issues to light, but we need to ensure that the balance of protection for employers and individuals is correct. We believe that the current clause achieves this, and I am therefore unable to support the hon. Lady’s amendment. However, I welcome the constructive work that she, among others, has been doing on the issue.

The hon. Member for Oldham East and Saddleworth (Debbie Abrahams) asked about the level of £5,000 and penalties. The provision is intended to mirror the national minimum wage compliance regime, so there is method behind it, but it will be possible to amend it if necessary.

I turn now to our amendments 16, 17 and 31 to clause 17. Members who followed the progress of the Bill through Committee will recall that the original clause, then clause 16, was accepted into the Bill without debate. The purpose of the clause then, as now, was to amend specified primary legislation to replace all references to “compromise agreements”, “compromise contracts” and “compromises”, where they occur in an employment context, with the terms “settlement agreement” or “settlement”. By renaming compromise agreements, we are addressing any conscious or sub-conscious reluctance by a party to use these agreements arising from the perception that they are conceding or “giving in” on some or all of their arguments. The original drafting of

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the clause—with the agreement of the Under-Secretary of State for Skills, the hon. Member for West Suffolk (Matthew Hancock)—extended the change of name to Northern Ireland in so far as it related to the National Minimum Wage Act 1998. Having since considered matters further, my Northern Ireland colleagues have concluded that such a change should not be made in isolation and should form part of the wider review of employment law that they have recently launched. As a consequence, it is necessary make minor amendments to restrict the effect of the name change to England, Scotland and Wales in only that Act.

I commend the Government amendments to the House and hope that I have fully explained why we are unable to support the other amendments in the group.

Mr Speaker: Before I call Mr Murray to speak to the new clause from the Opposition Front Bench, I have a short statement to make. Nominations for the Chair of the Procedure Committee closed yesterday, and an election was held by secret ballot earlier today. The following candidate was elected: Mr Charles Walker. The full breakdown of voting is set out in a paper which will be available from the Vote Office. I congratulate the hon. Gentleman on his election.

Mr James Gray (North Wiltshire) (Con): On a point of order, Mr Speaker. I would be most grateful if you could point me to the procedurally correct way of congratulating my hon. Friend the Member for Broxbourne (Mr Walker) on an outstanding victory, wishing him well in chairing an extremely important Committee of this House, and committing myself to serving under him loyally as an ordinary member of the Committee in future.

Hon. Members: Hear, hear.

Mr Speaker: I am extremely grateful to the hon. Gentleman for his point of order, and the reaction of the House shows that Members as a whole are as well. I thank him for what he said and for his participation in the election.

Ian Murray: I congratulate the hon. Member for Broxbourne (Mr Walker) on his election to the Procedure Committee.

Let me, too, start with an affair of state by saying happy birthday to the shadow Secretary of State for Business, Innovation and Skills, my hon. Friend the Member for Streatham (Mr Umunna). I will not lead the House in a chorus of “Happy Birthday”, but we wish him many happy returns.

While I warmly welcome the new Minister to her place, I have to say, with a tinge of disappointment, that I will miss her predecessor, the hon. Member for North Norfolk (Norman Lamb), for two reasons. First, we incessantly used his book, “How to maximise compensation at an employment tribunal”, in Committee. [Interruption.] For the information of the hon. Member for Skipton and Ripon (Julian Smith), the then Minister was formerly an employment lawyer. Secondly, at the end of Committee proceedings we bought him a small gift, “Fifty Shades of Grey”, relating to his other passion in life, and I was looking forward to questioning him on that. I hope that the hon. Lady has read the book, because then some of the references in my speech might make more sense.

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It is an indictment of how uncomfortable the Minister is with this part of the Bill that the Government have restricted the time available on Report to deal with the complicated issues within it. Let me be clear from the outset. It does not matter how much the Secretary of State stamps his feet or the Liberal Democrat Minister denies it, this Bill is delivering Beecroft by the back door. It is not just Labour Members who are saying that. I am delighted that the hon. Member for Skipton and Ripon is in his place, because he said the same in Committee, much to the disdain of the former Minister. As is consistent with most of the clauses in this hotch-potch of an enterprise Bill, these changes to rights at work are not about enterprise and are not a panacea for a Government with no strategy for growth.

I cannot emphasise enough that the hard-fought-for rights of employees up and down this country are not the reason we are in a double-dip recession; the failed economic policies of this Government are the reason.

Julian Smith rose—

Ian Murray: Let me make some progress, and then I will give way.

To start with the positives, I welcome new clause 8, which is derived from the report by Mr Justice Underhill and his esteemed team. We have always recognised the need to review the procedures of the employment tribunal system to make it work better for employees and employers, but with these proposals we have particular concerns about the increased use of deposit orders. We support the premise of deposit orders in deterring claims which may be unmeritorious, but we fear that their increased use, combined with the introduction of the fees regime, may restrict access to justice. This has the potential not only to restrict justice but to do so for the most vulnerable employees in the employment tribunal system. Will the Minister assess the impact of the changes on deposit orders? I appreciate her giving the commitment that if there were an impact she would return to the issue, but it is strange that these proposals have been introduced. Several of my hon. Friends have been asking about the evidence for doing so. Despite repeated pleas in Committee to produce a proper impact assessment on the insertion of fees into the process, that has not happened.

I welcome the provisions to allow for costs for lay representatives. We agree with Mr Justice Underhill when he said:

“We can see no reason why the claimant should not be able to recover those charges when he would have been able to if he had instructed a legal representative.”

We will not oppose these changes in new clause 8, as they have been properly evidenced, but I could not say that about the rest of part 2, where the Government have absolutely no evidence for any of their proposed changes. Indeed, their own impact assessments, and business surveys, show that there is little appetite for them in the business community. Businesses tell me and other Members that their main concerns are not employee regulations but lack of finance and the general state of the economy.

The reality is that the previous Labour Government created nearly 2 million jobs and 1 million businesses within the current system of employment rights. Mr Beecroft himself agreed, in effect, when he said in Committee that he had no empirical evidence but was

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basing these recommendations on experience and from talking to people in the pub. In Committee, we had a perfect 10 from Government Members in terms of anecdotes. I am sure that at one point we even heard a direct quote from the managing director of “Anecdotes R Us”. The evidence, particularly from the OECD, shows that the United Kingdom has the third most liberal employment rights regime in the western world.

Stella Creasy (Walthamstow) (Lab/Co-op): Does my hon. Friend agree that taking advice on employment rights from somebody who profits from legal loan sharks is perhaps not the right way forward when looking for effective guidelines and regulation?

Ian Murray: I am grateful for my hon. Friend’s intervention. I think that people can make up their own minds about the ideology and ethos of the report.

Amendment 80 deals with fees and their impact on ACAS early conciliation. In Committee we pressed amendments to assist applicants and to ensure that ACAS was properly resourced. The amendment covers a similar concern that we have about the new deposit orders. We welcome the new role for compulsory early conciliation by ACAS, but we are concerned that the insertion of the fees system after the ACAS conciliation process will dilute the effectiveness of conciliation and put employees in the untenable position of having to settle their dispute or find the necessary £1,200 to take it beyond the ACAS system.

Ed Sweeney, the chair of ACAS—I have mentioned this already—said during his evidence to the Committee that

“we do not know whether charging for tribunals would have an adverse effect on either employers or employees…Will there be less, from an employer’s point of view, of engaging in conciliation”?––[Official Report, Enterprise and Regulatory Reform Public Bill Committee, 19 June 2012; c. 68, Q146.]

The Minister herself has admitted that there could be an issue and will deal with that after the system is up and running. Despite being pressed time and again on this issue in Committee, no Minister has produced an impact assessment on the impact of ACAS conciliation when low-paid and vulnerable workers will have to find a fee to enter the employment tribunal system.

2 pm

Amendment 81 merely asks the Government to delete clause 12, because it is an ill-thought-out clause on settlement agreements, which are the key dividing point between us. The Government are trying to mix protected conversations with the current without prejudice rules, while adding a touch of Beecroft no-fault dismissal. Let me be totally clear: the reason why Opposition Members are against the clause is that it is bad for business.

Current compromise agreements can be used when there is a dispute between employee and employer. Indeed, they are already widely used—Thompsons Solicitors alone used nearly 6,000 of them last year. Under the new rules, employers will be able to offer an employee a sum of money if they agree to leave employment and sign a new settlement agreement. Any conversations or offers made with a view to terminating employment by agreement will be treated as confidential and will not be able to be considered by an employment tribunal in an unfair dismissal case, unless the employer has behaved

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improperly. The amount of satellite litigation in the potential attempts to define what improper behaviour is will grind the employment tribunal to a halt.

This also applies to cases involving impropriety with regards to discrimination. If someone who wants to have an honest and open conversation about age uses a settlement agreement, they will end up in an employment tribunal as a result of age discrimination legislation. Essentially, the Government will allow employers to make minimal offers to workers to leave, then gag those very same workers from even mentioning that at an employment tribunal.

The new process may even undermine this country’s redundancy regime. At present, employers must follow a proper procedure in order to dismiss under-performing workers. To challenge the hon. Member for Skipton and Ripon, I have run my own business and have dismissed employees, but every single working day I left my house to go to work to look after the biggest assets in my business, namely the employees. The new process will encourage bad practices. It will send a signal to employers that there is no longer a need to follow a formal disciplinary process and that they can try to push people out of the organisation by offering them a sum of money. That sounds like Adrian Beecroft’s report by the back door.

Teresa Pearce (Erith and Thamesmead) (Lab): Can my hon. Friend clarify something for me? The Minister said that, by definition, a settlement agreement would not amount to sacking an employee. Under the new sanctions regime for jobseeker’s allowance, if someone leaves their job voluntarily they cannot claim JSA for 13 weeks. Would a settlement agreement amount to them leaving their job voluntarily?

Ian Murray: My hon. Friend asks an exceptionally good question. I think that it would amount to a voluntary leaving of work, because the employee will not have been sacked—they will have come to an agreement with their employer that they will leave. They will not have been made redundant. I hope that the Minister will address that issue, because it could have significant consequences.

Julian Smith: It is incredible that the hon. Gentleman is unable to understand the frustration of many businesses on the issue of coming to the end of an employment relationship. Does he not understand how frustrating it is for many entrepreneurs throughout the country to finish a relationship with an employee that is not working out?

Ian Murray: The hon. Gentleman makes a tremendous intervention, because he is actually arguing our point: the proposals are bad for business. We would accept the Underhill review’s proposal to make the employment tribunal better and we would accept, with minor amendments, the ACAS proposal for early conciliation, but to put in place a compensated, no-fault-dismissal-cum-protected-conversation system would be bad for business. The hon. Gentleman must also realise that the Business Department’s own small business survey showed that only 6% of businesses listed regulation as a concern. That included all regulation, so employment regulation was only a minor part of it. He can shake his head, but that is what BIS’s own impact assessment says.

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Catherine McKinnell: The shadow Minister is making a powerful case as to why the measures are bad for business. To follow on from the important point made by my hon. Friend the Member for Sunderland Central (Julie Elliott), people who rely on mortgage protection insurance are also likely to be adversely affected if they enter into a settlement agreement. Have the Government considered whether that protection could be invoked if those affected enter into a voluntary agreement to leave their employment?

Ian Murray: My hon. Friend makes a fantastic point. I do not have the answer, because the Government have not told us, but it seems that if an insurance company can do anything to get out of paying a particular insurance policy, it will do so. Perhaps the Minister will address that.

Citizens Advice has said clearly—I think it has sent this briefing to all Members—that

“this looks less like an attempt to encourage more use of compromise agreements, than a further erosion of the legal protection against unfair dismissal.”

The Minister has been challenged to say exactly what the settlement agreement represents and to come clean. If she did so, this would be a far easier debate to deal with.

The current system allows for the use of compromise agreements when there is a dispute. The new settlement agreements can be used at any time, but it is clear that they are likely to create a dispute. The reality is that the mere fact of instigating discussions without prior process is likely to cause the end of the employment relationship, which is exactly what the employer will want. It is the equivalent of one party in a personal relationship saying to the other party, completely out of the blue, “I don’t love you anymore.” Who would hang around after that? [Interruption.] My hon. Friend the Member for Hartlepool (Mr Wright) suggests that I am speaking from personal experience, but I could not possibly comment. We propose to delete the Beecroft clause, because it is bad for business and equally bad for employees.

Julian Smith: Will the hon. Gentleman confirm that Labour does not believe that regulation is a big issue for business?

Ian Murray: The hon. Gentleman spent a lot of time in Committee posing such questions, but the Federation of Small Businesses, the Engineering Employers Federation, Citizens Advice and many of the top groups that deal with employers and employees tell us that a compensated, no-fault dismissal is bad for business, and BIS’s own impact assessment says exactly the same. Until the Government can produce empirical evidence that underpins some of the Beecroft reforms, I am unwilling to believe what the hon. Gentleman says.

I hope that the Minister has listened to my comments on amendment 81 and I will test the opinion of the House on it at the appropriate time.

Amendment 82 would remove clause 13 and its provision on compensatory awards. The clause gives the Secretary of State the power to alter the amount of compensation paid to an employee who is found by a judge to have been unfairly dismissed. Every Government member of the Committee indicated that they want the amount to be drastically reduced, despite the fact that the Bill gives

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the Secretary of State the potential to increase it from its current level of £72,000. The Secretary of State has indicated that his cap would be a maximum of either an annual salary or median earnings, whichever is the lower, potentially limiting all claims to about £26,000, the effect of which would be to hit anyone who earns more than average earnings. This Government have hit middle earners time and again and these proposals have the potential to hit them hardest when they will have actually won a claim at an employment tribunal. It should be up to the employment tribunal judge to decide what an adequate compensatory award is, not the Secretary of State.

I will give the House an anonymised example. A claimant was dismissed at the age of 58. He was earning as little as £26,020 net per year, but owing to dismissal will not attain that level of earnings before he retires at 65. After eight months of unemployment, the claimant got a job on £20,020 net per year. His loss was calculated by a judge at an employment tribunal to be £124,200. Under the current regime, he would receive 62% of that claim. Under the Secretary of State’s regime, he would receive less than 20% of it. That is somebody on fairly average earnings of about £26,000 a year. Citizens Advice has stated:

“The idea that this could have a measurable effect on the behaviour of workers and employers is not credible”.

It proposes the deletion of clause 13 on that basis. That is why I would like to test the opinion of the House later this afternoon.

The critical point is that the combined impact of settlement agreements, ACAS early conciliation, fees and the lowering of the cap on compensatory awards will deliver the very compensated no-fault dismissal that was in the Beecroft report. Let me demonstrate why. If an employer decides that he no longer likes an employee, he might offer them a sum of money to leave his employment in a settlement agreement. The employer could say that the amount offered will be reduced each day that the settlement agreement is not accepted. The employee will feel pressured into accepting an offer for fear of victimisation, for fear that the offer will be withdrawn or reduced over time, or because of the spectre of having to take an unfair dismissal claim with the associated fee structure. Even if the employee were to win the tribunal case, the compensation cap proposed by the Secretary of State would be considerably lower than the losses that they had encountered.

This is a rogues charter that will result in poorly compensated employees who feel that the system is too complicated and expensive to make a rightful claim for justice. This is compensated no-fault dismissal in action. Let us not mention the ludicrous announcement by the Chancellor at the Conservative party conference that people could give up their workplace rights for a few company shares.

I will quickly run through amendments 92 and 83. In Committee, we pressed the then Minister, the hon. Member for North Norfolk, to introduce a better system for the enforcement of employment tribunal awards. He committed to look at that, but nothing has come forward. As the Minister has said today, some 40% of people who have been found by a judge at an employment tribunal to have been unfairly dismissed never receive their award. I am glad that the Minister is as shocked as

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we are by those figures and is looking at the matter. I will support her if there is a genuine attempt to make the system better.

Amendment 92 would essentially add to the powers of the employment tribunal to impose a penalty on an employer who does not settle the award within the time specified by the judge. It seems strange that the Government are proposing to fine an employer for aggravated circumstances in order to boost the coffers of the Treasury, while the employee has to wait or gets nothing at all. I am sure that many Members have constituents who have not been paid their compensatory awards.

Amendment 83 would merely remove the provision that introduces a parking ticket-style discount to employers if they pay their fine to the Treasury within the set period of time. That could have the unintended consequence of the penalty being prioritised over the awards due to the employee.

I will move on to amendment 94 and the new clauses tabled by my hon. Friend the Member for North Ayrshire and Arran (Katy Clark). Amendment 94 relates to clause 15, in which the Government attempt to limit the definition of a protected disclosure, which is the basis of whistleblowing claims. Whistleblowing is a day-one right that has the potential for unlimited compensation. The Opposition agree with the Government that this should not be used for an individual’s own employment contract, but we disagree that inserting a public interest test into the legislation will assist in the matter.

The Law Society agrees with us. It has said that the provision should state that a breach of a legal obligation requires something more than a breach of the individual contract of employment, so as to satisfy the public interest test. At present, the provision means that allegations about matters other than a simple breach of a legal obligation must fall within a test of public interest. A disclosure that a criminal offence has been committed would therefore also have to satisfy the public interest test.

We propose that the legislation be altered to omit an individual’s employment contract from whistleblowing claims, unless it satisfies the public interest test. One reason why the Government have got it wrong on this matter is that there has been no consultation with the relevant parties and stakeholders on how best to achieve the goals that we want to achieve.

2.15 pm

The Government are trying to make it easier to fire, rather than hire, employees. They have no empirical evidence that the changes will improve the system. Indeed, the potential unintended consequences of an explosion in satellite litigation have been raised by many stakeholders and by many Members this afternoon. The impact will be felt by the lowest-paid and the most vulnerable. Although many Government Members are using the Bill as a way to attack the trade union movement, the changes will affect those who are not in a trade union the most, because they do not have the same representation.

Yesterday, we heard that the Government were legislating to try to change perceptions of health and safety. Today, they are doing the same with the perceptions of employees’ rights at work, rather than dealing with those perceptions.

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An eminent employment lawyer with over 30 years’ experience, Joy Drummond from Simpson Millar, emphasised that in Committee:

“Isn’t it more responsible for a Government to educate…employers and publicise the traps and how they should behave, rather than to legislate on the basis of a myth which, in itself, will, through implementation in such a way, cause more problems for everybody?”[Official Report, Enterprise and Regulatory Reform Public Bill Committee, 21 June 2012; c. 97, Q212.]

That is why the measures that we are putting forward would be good for business.

Most shockingly, these reforms will impact on consumer confidence by damaging job security. These reforms purport to assist business, but they might have the opposite effect on the economy. Do not take that from me. The Minister’s predecessor, the hon. Member for North Norfolk, said of the Beecroft report before he was appointed to the Business, Innovation and Skills team:

“I think it would be madness to throw away all employment protection in the way that’s proposed, and it could be very damaging to consumer confidence.”

He went on to say, “It’s crazy”. The Bill has the potential to choke off access to justice for people who have been wronged in the workplace and deserve justice. It also has the potential to damage growth. I challenge the Minister and the Government to prove once and for all that this is not Beecroft by the back door by joining us in the Lobby this afternoon.

Richard Fuller: I will speak in favour of the two amendments relating to clause 14 that stand in my name. We have heard many legal arguments today. I am not a lawyer by training, so I have listened as intently as I can. My background is in business, and I draw the House’s attention to my continuing interests.

The Minister did an excellent job of portraying the middle path that she is taking with the legislation. I intervened on her to say that many business people feel that Parliament and politicians are out of touch with the realities of their day-to-day business. In some cases, their voice is not heard loudly enough. My amendments deal with one area where there is further that the Minister could go.

Julian Smith: My hon. Friend says that the public feel that this place is sometimes out of touch. From what he has heard from Opposition Members, would he say that Labour is anti-business and completely out of touch with entrepreneurs?

Richard Fuller: My hon. Friend makes an excellent point. All of us are aware that the Labour party has trouble understanding aspiration and even more trouble in rewarding aspiration. I am sure that Opposition Members will reflect deeply on the point that he has made.

Mr Iain Wright (Hartlepool) (Lab) indicated dissent.

Richard Fuller: The shadow Minister does not agree with me, but let me point out to him the way in which the hon. Members for Walthamstow (Stella Creasy) and for Edinburgh South (Ian Murray) have spoken about Mr Beecroft. Somehow, a person becomes a word, which becomes something to be thrown around and handled in the most insulting of ways. There is no understanding of what Adrian Beecroft has done.

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John Cryer: Did the hon. Gentleman read the evidence that Mr Beecroft gave to the Public Bill Committee? When he was asked, repeatedly, what the basis of his assertions was on a whole range of subjects, and what evidence he was bringing to bear, he more or less said, “Well, it’s something I’ve just dreamed up.” He did not present any particular evidence that I can pinpoint in the Hansard report.

Richard Fuller: The hon. Gentleman makes a good point, but—[Interruption.] I am serious, and this is a serious point. I do not know much about football, but I understand that the idea is to play the ball, not the man. That is also important in debates, which was why I did not feel it was correct when the Secretary of State dismissed Adrian Beecroft’s proposals out of hand and called them “bonkers” on Second Reading. It is important that we should debate those proposals. If, as the hon. Gentleman says, there is not sufficient evidence for them, let us look forward and move on to other issues.

My point is that Opposition Members too often harangue business people or try to portray them in a particular light. I refer particularly to the comments of the hon. Member for Walthamstow, who I believe discussed how Mr Beecroft made his money. I gently urge her to recognise that Mr Beecroft’s boss at the time—they were in the same company, making the same money—was an adviser to the former Prime Minister, and that the Labour party received millions of pounds in donations from that gentleman. If she wishes to make such points about one individual, I look forward to being copied in on her letter to the Leader of the Opposition suggesting that the Labour party should return that money.

Gregg McClymont (Cumbernauld, Kilsyth and Kirkintilloch East) (Lab): The hon. Gentleman has mentioned some adjectives used about Beecroft that he thinks were less than precise. Surely a simpler way to put it is that the plural of “anecdote” is not “evidence”. Beecroft presented a series of anecdotes about business that he could not back up with any facts. I know the hon. Gentleman well enough to know that he is in the facts business, so surely he will reflect on that when considering Mr Beecroft’s report.

Richard Fuller: The hon. Gentleman, too, makes a good point. I have read the evidence given to the Public Bill Committee, and it was not sufficiently evidentiary to move Mr Beecroft’s point forward. However, the hon. Gentleman will know that developed economies are currently having trouble with how to increase employment as they come out of recession. In the United States and the United Kingdom, it is taking us longer to create jobs as the economy recovers. It is therefore imperative that we look at the evidence, to see whether we wish to promote the Beecroft proposals. That is why we need a deeper and more serious debate than just talking about poor evidence in a Public Bill Committee or anecdotal evidence somewhere else, and one without name-calling.

Mr David Anderson (Blaydon) (Lab): The hon. Gentleman makes the exact point that we constantly made in the Public Bill Committee. Given what he is saying, surely we should stop this debate and then take a view one way or another when we have got the evidence. At the moment, everything that the Government are doing is based on views that are not evidence-based.

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Richard Fuller: I appreciate the hon. Gentleman’s perspective, but the Minister made quite clear her belief that there is sufficient evidence and support for the Government’s measures. Many of us think that they will go quite some way towards providing what businesses and employees would see as a reasonable and fair way to make efficient changes in the procedures for dismissal, dealing with unfair dismissal and tribunals.

I wish to focus on clause 14 and my amendments to it. Amendment 58 would delete the clause entirely, and amendment 59 would apply its principles only to businesses outside the micro-business sector—those that have more than 10 employees. The shadow Minister, the hon. Member for Edinburgh South, has given a number of the justifications for doing that both in Committee and today. First, there is the principle that involving the Government in a dispute between an employer and an employee may complicate the achievement of a settlement between those two parties. It is difficult to understand the a priori reason why a Government should try to achieve a take, because as he made clear, we should be trying to ensure that employers pay the amount for which they are responsible to an employee who has been aggrieved by a dismissal. I listened to the Minister’s comments, but my concern is that the clause will provide additional complexity in the process.

As the Minister indicated, the clause will also create an imbalance between the employee and the employer, and we are not sure how that will play out under the new regime. I hope that if the Minister will not accept my amendments today, she will at least agree to examine how the changes play out, and perhaps consider whether the issue of financial penalties should be reviewed in future.

Julian Smith: It is worth recording that every business representative group in Britain is concerned about the clause, for many of the reasons that my hon. Friend has given.

Richard Fuller: I thank my hon. Friend very much for that intervention.

Julie Hilling (Bolton West) (Lab): I can understand why businesses do not want to face the reality of their actions, but we know that many businesses flout employment law, whether deliberately or innocently. If anybody breaks the law in any other walk of life, whether through a driving offence, robbing a shop or whatever, there is a penalty to be paid. Clause 14 is not about innocent omissions; it is about employers doing something deliberately. From many years of representing people, I know that employers often deliberately go against what is written in legislation. Surely they should have to pay some penalty for doing that, just as anybody would in any other walk of life. If someone breaks the law, they pay a cost.

Richard Fuller: The hon. Lady makes some good points from her experience, but my view is that we should focus our attention on ensuring that the aggrieved employee is in the best possible position to receive the maximum amount of the settlement that has been made in their favour. As was shown in evidence to the Public Bill Committee, in a large proportion of cases the employee does not get that amount. I do not see how it

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will help to add an additional burden on top of that, with the Government trying to take money as well. There seems to be a discord between that and our trying to do the best by employees. That is why I would rather the clause be completely removed.

I believe the shadow Minister said in the Public Bill Committee that in 59% of cases, employees do not receive the full settlement, and I would like the Government’s focus to be on reducing that figure. I believe that the clause is unhelpful, and as my hon. Friend the Member for Skipton and Ripon (Julian Smith) said, business representatives also believe that.

Julie Hilling: What, then, do we do with employers who continue to flout the law? I absolutely agree that the claimant should get the compensation to which they are entitled, but some employers continuously flout the law and just pay a small amount. Often, employees get a small award at tribunal anyway, depending on their age, length of service and income. What do we do with those employers?

Richard Fuller: That is an interesting question. My amateur response is that there are better ways to solve the problem than the method in clause 14. Imposing an additional burden in the form of money going to a different party, the Government, is not the optimum path to reach the resolution and outcome that both the hon. Lady and I would like to see when an employer has acted inappropriately and is not paying the bill that he or she should to the aggrieved employee. In general, as I have said a number of times, I would rather have the law presume that the employer is doing the right thing and will make the right payments. If he or she does not, there should be other measures, which perhaps the Minister can mention in her response.

As we have heard from my hon. Friend the Member for Skipton and Ripon, both the Federation of Small Businesses and the Institute of Directors have made representations to the Government that it would be better to remove the penalty on businesses imposed by clause 14. I have mentioned some of the representations made to the Government by the Law Society—that the benefits of imposing financial penalties on employers are not convincing—and, perhaps for slightly different reasons, from Opposition Members we have heard why the clause may not be good. I would rather leave those comments for the Minister to reflect on than push the amendments to a vote. I appreciate the hearing from the House.

2.30 pm

Katy Clark (North Ayrshire and Arran) (Lab): I will speak to new clauses 1 and 2, which relate to different aspects of whistleblowing. The current provisions on whistleblowing are in the Public Interest Disclosure Act 1998, a landmark piece of legislation introduced by the previous Labour Government. That legislation was fought for by many people over many years, and came about as a result of decades of campaigning by many across the political divide. I am therefore pleased to see that the hon. Member for Aldridge-Brownhills (Mr Shepherd) is listening to the debate, as he was one of those who campaigned on this matter during the previous Conservative Government.

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Clause 15 introduces a public interest test into the whistleblowing legislation, and future claims will be successful only if the worker believed that the disclosure was made in the public interest and—in the case of wider disclosures—can demonstrate that that belief was reasonable under the circumstances. The clause will make it more difficult for people to rely on the 1998 Act, as it creates yet another legal test in what is already a complex legal area, and means that those who may be considering whistleblowing will face yet another hurdle to obtain the protection of the legislation. New clause 1 would remove one of the other legal tests—the good faith test—from the legislation.

There is no doubt that lives have been saved as a result of public interest disclosure legislation. However, as the Minister indicated, Dame Janet Smith stated in the Shipman inquiry that the good faith test was a barrier to whistleblowers, and that is borne out in reports from the ongoing Mid Staffordshire and Leveson inquiries. Given that another test is being added for a protected disclosure to be met, we must consider whether the proposed legislation will make it more difficult for someone to get the protection of the law.

I believe that Parliament and politicians should want individuals to whistleblow when that is in the public interest. Indeed, at almost any point in history, there have been situations in which it was—and should have been—appropriate for an individual to bring information to the attention of the relevant authorities or, where appropriate, the public, irrespective of whether they could prove that they were acting in good faith.

Julian Smith: I pay tribute to the work done by the hon. Lady on this important issue. Does she think that the time has come to consider the American model in which society starts to give incentives to whistleblowers, and will she comment on that?

Katy Clark: I would not necessarily say there should be incentives, but people should not be punished for whistleblowing. It is currently very difficult to get the protection of the law, and we need to look at that. That is why I, together with others, have called on the Government to look at the entire area. It is now more than a decade since the 1998 Act was introduced, and we need a thorough review and full public consultation on all issues associated with whistleblowing.

Current topical examples of where I believe it should not be necessary for someone to show that they are acting in good faith include the allegations that are coming to light about Jimmy Savile, and the cover-up that we have seen over many years following the Hillsborough disaster. There will be many other examples central to the political debate where politicians would welcome whistleblowers taking action.

Julie Hilling: Briefly, I would like to give another example. At Network Rail, women were consistently getting compromise agreements and therefore being gagged from speaking about things that were taking place. They were all women, so one can imagine the sorts of situations involved. The proposed legislation would make life much harder for people in such situations.

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Katy Clark: My hon. Friend is absolutely correct. There must be mechanisms by which people can bring problems of that nature to the attention of the appropriate authorities.

By going ahead with this legislation and creating new hurdles, the Government will make it more difficult to rely on whistleblowing legislation. There is a strong argument that the motives of the claimant are irrelevant if bringing forward such information is in the public interest. As they stand, the Government’s proposals will significantly water down whistleblowing legislation in this country, but that balance would be significantly restored if new clause 1 were accepted.

New clause 2 deals with vicarious liability and addresses a loophole that has arisen as a result of the case of NHS Manchester v. Fecitt and others, of which the Minister will be aware. Three nurses from Manchester raised a concern about a colleague lying about his qualifications, but they were unable to rely on the protection of the law. Will the Minister seriously consider accepting new clause 2, as that would allow that loophole to be closed?

Mr Richard Shepherd (Aldridge-Brownhills) (Con): I apologise for not having heard the opening remarks by the hon. Member for North Ayrshire and Arran (Katy Clark). I can see, however, that she was doing a bonny job, and these are important issues that, in a sense, have been imported into the Bill because of what she describes.

I am a passionate believer in whistleblowing, and I stand in the shadow of some giants from the time just after the election of the previous Labour Government. Tony Wright came up with the idea that people who make disclosures in the public interest should be protected by law, and that surprising proposition met with approval across the House. Other people were involved. Sir Ian McCartney, then a distinguished Member of this House, fought within his Department to see this process advanced, and the Liberal Democrats supported it with interest and vigour. From my party, the Secretary of State for Work and Pensions, then Leader of the Opposition, supported the legislation and served on its Committee. Nor should I forget Lord Borrie, who did sterling work in the House of Lords.

Tony Wright’s original idea that something could—and should—be done, set in train a motion that found supporters from across the House and among their lordships, and from the then new Labour Government. I was fortunate enough—or merely the vessel, depending on how one looks at it—to deliver the idea through a private Member’s Bill. I am, therefore, delighted to hear a newish Labour Member standing up for something that reaches across the parties and has an important principle behind it.

The confusion identified by Public Concern at Work seems to many to cut across what the Government are trying to do. Hon. Members are sympathetic to the Government’s attempt to bring clarity, and many of us are mindful of bullying in public places or the workplace. Nothing should harm the feeling that an individual should be able to come forward and argue that they are making a disclosure, because that is in the interest of society as a whole and of corporate government.

I am cheered by comments from some of my colleagues, who clearly want to make this legislation a working part of ensuring that fraud and criminal activities, as well as

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all the other matters that have been raised by Public Concern at Work and that are in the public interest, do not take place. After all, the legislation is entitled the Public Interest Disclosure Act 1998. I urge the Government please to enter into negotiations with wider society, and particularly organisations such as Public Concern at Work. The Bill must go to the House of Lords, and I have no doubt that the legal differentiation between terms will be closely scrutinised. I advocate that the bonny Minister raises the flag and fights for a change to the formulation of words, as proposed in new clauses 1 and 2.

John McDonnell: We have extremely limited time to debate this group of proposals if we are to debate the green investment bank. I absolutely abhor the programme motion, and the Minister took up nearly a third of the time for debate. Report is the only stage at which someone not on the Committee can table and debate amendments, and I have only around five minutes to speak to mine.

We naively debate the detail of legislation and Bills without understanding their political context. The political context of the Bill is the statements made at the Conservative party conference. This is the first stage in a legislative process under this Government of giving employers the licence to sack at will. That is what this legislation is about.

When the Minister spoke, it was like having a delegate from the Institute of Directors in the Chamber. The measure is like the first stage of the IOD programme for reforming employment law.

Julian Smith: Will the hon. Gentleman give way?

John McDonnell: No, I will not, because we do not have time and, to be honest, the hon. Gentleman is becoming monotonously boring.

When the Prime Minister spoke at the Conservative party conference, he said that he was on the side of the strivers. He makes it clear in the Bill that he is on the side of employers who want to sack people—without adequate compensation or adequate protection in law.

I have tabled a number of simple, basic amendments to ameliorate the proposed legislation, all of which have been rejected. I suggested that there should be a sanction against employers who do not participate in conciliation. We are told that such a sanction already exists, so my proposal would simply codify what the Minister has said happens in practice. It is important that we include that in the Bill.

I have made a simple attempt to amend the time scales in which claimants can prepare their case. A month is not enough for them—they must collect information and seek legal advice, and individuals often draft legal papers themselves. A six-month time scale would reflect that reality.

Another proposal would ensure that the processes being introduced by the Government have the confidence of all sides. It is unacceptable for the judge to determine who is on the Employment Appeal Tribunal, because it removes the experience of both sides of industry, who could advise the judge. My proposal is simply that consensus should be achieved and that the decision should be made with the approval of both the employee and employer representatives—all parties concerned. Even that proposal has been rejected.

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People are not currently adequately compensated, which is why the cap is unacceptable. In no other area of law does a judge make an assessment that someone has lost and determine compensation, only for a cap to prevent full compensation. That is why there should be no cap, and yet the Government are keen on caps—they have introduced a £5,000 cap on fines against employers. What is £5,000 to companies such as Virgin or Starbucks, which we heard about yesterday? They are billion-pound companies. What is a £5,000 fine to them? It is meaningless.

Nick de Bois (Enfield North) (Con): Will the hon. Gentleman give way?

John McDonnell: No, because the hon. Gentleman came late to the debate.

Nick de Bois: I am not boring!

John McDonnell: I might allow the hon. Gentleman to intervene if he came to the Chamber occasionally.

The point of my proposals is to ensure a balance of fairness in the regime that is being introduced. There is currently no balance whatever. The Bill is Beecroft. It is based on no evidence and on prejudice, and is the first stage of the Government’s plans to undermine employment law. This is the first stage of undermining the protections that workers have. People outside the Chamber will realise what is happening in the coming months under this Government. Jobs will be shredded and people will have no protection whatever as a result of the Bill and what will follow. On that basis, I wholeheartedly support Opposition Front Benchers in attempting to remove those clauses.

2.45 pm

Jo Swinson: I thank hon. Members who have taken part in this debate. I note the point made by the hon. Member for Hayes and Harlington (John McDonnell) that I spoke at length at the beginning of the debate. I wanted to ensure that I covered all the issues raised and to be fair to Members in taking all interventions offered, which is the spirit in which I have approached the debate. That obviously meant that my remarks were rather lengthy.

I want to respond to the points raised in the debate, because hon. Members are keen to get to the next business. The hon. Member for Edinburgh South (Ian Murray)—the shadow Minister—queried clause 13 and said that it would hit middle earners, but I fear that his analysis of the situation reinforces unrealistic expectations. The average award at an employment tribunal is less than £5,000. In reality, only 0.3% of unfair dismissal claimants are awarded more than the annual salary. The purpose of the measure is to provide additional certainty and to help challenge those unrealistic expectations, but he has not characterised it entirely fairly.

Gregg McClymont: Will the Minister give way?

Jo Swinson: I will give way to the hon. Gentleman, but I remind him that Labour Members are also keen to get to the next business.

Gregg McClymont: If the average award is around £5,000, why is there a rush to get rid of the system?

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Jo Swinson: As I was saying, the measure provides additional certainty and encourages both employers and employees to recognise that high awards are unlikely. Because of the current cap, some people can be misled into believing that high awards are likely, and end up pursuing that route when they could be better served by early conciliation and the other approaches outlined in the Bill.

I welcome the shadow Minister’s offer to work constructively on solving the problem of unpaid tribunal awards.

Tom Greatrex: Will the Minister give way?

Jo Swinson: I will give way, but I encourage hon. Members not to intervene to raise points that have already been debated—we have gone over a lot of the ground already. This will hopefully be something new.

Tom Greatrex: I was unable to make a speech because of the length of the Minister’s contribution, but I would like to raise a specific point on unpaid awards. I have raised a case from my constituency previously but did not get to give the full details. Will the Minister meet me and my constituent to go through some of the circumstances? The problem cuts across the Government, and involves not just the Department for Business, Innovation and Skills. Sometimes companies avoid paying the awards they should be paying, which challenges some of the points made by Government Members about who has confidence in the system.

Jo Swinson: I would be happy to meet the hon. Gentleman and his constituent, who, I am sure, is very grateful for the work he has done on this case. It is important to constituents to have the support of their MPs on such issues.

In response to my hon. Friend the Member for Bedford (Richard Fuller), I point out that representations from business suggested we should not proceed with financial penalties, but the ability of a tribunal to impose a penalty when it believes an employer has acted wholly inappropriately is right. I reinforce the point that good employers have nothing to fear, and I welcome the fact that he will not press the amendments to a Division.

I took a lot of interventions on clause 12, but I want to respond to some of the specific points made in the debate. The issue of jobseeker’s allowance was raised. The rules and decisions that currently apply to the regime of compromise agreements will apply to settlement agreements. When assessing claims, jobcentre staff could take into account the facts of the case, how the agreement was instigated and what the reasons for it were. We are also in discussions with the Department for Work and Pensions to ensure that those rules are applied appropriately. Obviously, because it is a voluntary agreement, it will not be a sacking if the employee does not wish it to be, but equally it could be negotiated in such an agreement that the reason for leaving could be deemed to be dismissal. That could help individuals by providing them with additional clarity around jobseeker’s allowance and insurance protection, although I add the caveat, of course, that people would need to look at their specific insurance policies and that those policies would vary from case to case. As I said, however, the wording in the final agreement could assist in such cases.

17 Oct 2012 : Column 364

The shadow Minister suggested that there would be a problem with tribunals grinding to a halt when trying to define the word “improper”. That is not expected to be the case. Tribunals already play a valuable role in interpreting legislation. At the moment, they interpret what “reasonable” means in unfair dismissal cases, and we expect them to consider the meaning of “unambiguous impropriety”, as already happens in the civil courts and case law, in their deliberations on this test. He gave the example of a scenario in which an employer offers a settlement agreement but says that the amount will reduce each day until it is accepted. As my predecessor said in Committee, we would consider that the type of improper behaviour to which the protection would not apply. As I said, however, that consultation is ongoing.

On clause 12, the shadow Minister gave the analogy of somebody in a relationship suddenly saying, “I don’t love you anymore.” That is not a fair analogy. The appropriate analogy would be: “We need to talk.” When something is not working out, encouraging early dialogue is a good thing. That is the spirit behind all these changes, whether on early conciliation, rapid resolution or streamlining and improving the employment tribunal system. Ultimately, our aim is to have fewer tribunals taking place. That would be good for employees and employers, and I commend the Government amendments and new clause to the House.

Question put and agreed to.

New clause 8 accordingly read a Second time, and added to the Bill.


Clause 7

Conciliation before institution of proceedings

Amendments made: 6, page 4, line 18, leave out ‘send’ and insert ‘provide’.

Amendment 7, page 5, line 33, leave out ‘sending’ and insert ‘providing’.—(Jo Swinson.)

Clause 12

Confidentiality of negotiations before termination of employment

Amendment proposed: 81, page 8, line 19, leave out Clause 12.—(Ian Murray.)

Questionput, That the amendment be made.

The House divided:

Ayes 224, Noes 279.

Division No. 76]

[2.53 pm

AYES

Abbott, Ms Diane

Abrahams, Debbie

Ainsworth, rh Mr Bob

Alexander, Heidi

Ali, Rushanara

Allen, Mr Graham

Anderson, Mr David

Austin, Ian

Bailey, Mr Adrian

Bain, Mr William

Banks, Gordon

Barron, rh Mr Kevin

Beckett, rh Margaret

Begg, Dame Anne

Benn, rh Hilary

Benton, Mr Joe

Berger, Luciana

Betts, Mr Clive

Blackman-Woods, Roberta

Blenkinsop, Tom

Blomfield, Paul

Blunkett, rh Mr David

Bradshaw, rh Mr Ben

Brennan, Kevin

Brown, Lyn

Brown, rh Mr Nicholas

Brown, Mr Russell

Bryant, Chris

Burden, Richard

Burnham, rh Andy

Byrne, rh Mr Liam

Campbell, Mr Alan

Campbell, Mr Gregory

Campbell, Mr Ronnie

Clark, Katy

Clarke, rh Mr Tom

Coaker, Vernon

Coffey, Ann

Connarty, Michael

Cooper, Rosie

Cooper, rh Yvette

Corbyn, Jeremy

Crausby, Mr David

Creagh, Mary

Creasy, Stella

Cruddas, Jon

Cryer, John

Cunningham, Alex

Cunningham, Mr Jim

Dakin, Nic

Danczuk, Simon

Darling, rh Mr Alistair

David, Wayne

Davidson, Mr Ian

Davies, Geraint

De Piero, Gloria

Denham, rh Mr John

Dobbin, Jim

Dobson, rh Frank

Docherty, Thomas

Donaldson, rh Mr Jeffrey M.

Donohoe, Mr Brian H.

Doran, Mr Frank

Dowd, Jim

Doyle, Gemma

Dromey, Jack

Dugher, Michael

Durkan, Mark

Eagle, Ms Angela

Edwards, Jonathan

Elliott, Julie

Engel, Natascha

Esterson, Bill

Evans, Chris

Farrelly, Paul

Field, rh Mr Frank

Fitzpatrick, Jim

Flello, Robert

Flint, rh Caroline

Fovargue, Yvonne

Francis, Dr Hywel

Gapes, Mike

Gilmore, Sheila

Glass, Pat

Glindon, Mrs Mary

Godsiff, Mr Roger

Goodman, Helen

Greatrex, Tom

Green, Kate

Griffith, Nia

Hain, rh Mr Peter

Hamilton, Fabian

Harman, rh Ms Harriet

Harris, Mr Tom

Havard, Mr Dai

Healey, rh John

Hendrick, Mark

Hepburn, Mr Stephen

Hermon, Lady

Heyes, David

Hillier, Meg

Hilling, Julie

Hodge, rh Margaret

Hodgson, Mrs Sharon

Hoey, Kate

Hopkins, Kelvin

Hosie, Stewart

Hunt, Tristram

Irranca-Davies, Huw

Jackson, Glenda

James, Mrs Siân C.

Jamieson, Cathy

Jarvis, Dan

Johnson, rh Alan

Johnson, Diana

Jones, Graham

Jones, Helen

Jones, Mr Kevan

Jones, Susan Elan

Joyce, Eric

Kaufman, rh Sir Gerald

Keeley, Barbara

Kendall, Liz

Khan, rh Sadiq

Lavery, Ian

Leslie, Chris

Lewis, Mr Ivan

Lloyd, Tony

Llwyd, rh Mr Elfyn

Long, Naomi

Lucas, Caroline

Lucas, Ian

MacNeil, Mr Angus Brendan

MacShane, rh Mr Denis

Mactaggart, Fiona

Mahmood, Mr Khalid

Mahmood, Shabana

Malhotra, Seema

Mann, John

Marsden, Mr Gordon

McCabe, Steve

McCann, Mr Michael

McCarthy, Kerry

McClymont, Gregg

McCrea, Dr William

McDonnell, John

McGovern, Alison

McGovern, Jim

McGuire, rh Mrs Anne

McKechin, Ann

McKenzie, Mr Iain

McKinnell, Catherine

Meacher, rh Mr Michael

Mearns, Ian

Michael, rh Alun

Miller, Andrew

Mitchell, Austin

Moon, Mrs Madeleine

Morden, Jessica

Morrice, Graeme

(Livingston)

Morris, Grahame M.

(Easington)

Mudie, Mr George

Munn, Meg

Murphy, rh Mr Jim

Murray, Ian

Nandy, Lisa

Nash, Pamela

Onwurah, Chi

Osborne, Sandra

Owen, Albert

Paisley, Ian

Pearce, Teresa

Perkins, Toby

Phillipson, Bridget

Pound, Stephen

Qureshi, Yasmin

Reed, Mr Jamie

Reeves, Rachel

Reynolds, Emma

Riordan, Mrs Linda

Ritchie, Ms Margaret

Robinson, Mr Geoffrey

Roy, Mr Frank

Roy, Lindsay

Ruane, Chris

Ruddock, rh Dame Joan

Sarwar, Anas

Shannon, Jim

Sharma, Mr Virendra

Sheerman, Mr Barry

Sheridan, Jim

Simpson, David

Skinner, Mr Dennis

Slaughter, Mr Andy

Smith, rh Mr Andrew

Smith, Angela

Smith, Owen

Spellar, rh Mr John

Straw, rh Mr Jack

Stringer, Graham

Stuart, Ms Gisela

Sutcliffe, Mr Gerry

Tami, Mark

Thomas, Mr Gareth

Thornberry, Emily

Timms, rh Stephen

Trickett, Jon

Turner, Karl

Twigg, Derek

Umunna, Mr Chuka

Vaz, rh Keith

Vaz, Valerie

Watson, Mr Tom

Watts, Mr Dave

Weir, Mr Mike

Whiteford, Dr Eilidh

Williams, Hywel

Williamson, Chris

Winnick, Mr David

Winterton, rh Ms Rosie

Wishart, Pete

Woodward, rh Mr Shaun

Wright, David

Wright, Mr Iain

Tellers for the Ayes:

Mr David Hamilton and

Phil Wilson

NOES

Adams, Nigel

Afriyie, Adam

Amess, Mr David

Arbuthnot, rh Mr James

Bacon, Mr Richard

Baker, Norman

Baldry, Sir Tony

Baldwin, Harriett

Barclay, Stephen

Barker, rh Gregory

Baron, Mr John

Barwell, Gavin

Bebb, Guto

Beith, rh Sir Alan

Bellingham, Mr Henry

Beresford, Sir Paul

Bingham, Andrew

Binley, Mr Brian

Birtwistle, Gordon

Blackman, Bob

Blackwood, Nicola

Blunt, Mr Crispin

Boles, Nick

Bone, Mr Peter

Brake, rh Tom

Bray, Angie

Brazier, Mr Julian

Bridgen, Andrew

Brine, Steve

Brokenshire, James

Brooke, Annette

Bruce, Fiona

Bruce, rh Sir Malcolm

Buckland, Mr Robert

Burley, Mr Aidan

Burns, Conor

Burns, rh Mr Simon

Burrowes, Mr David

Burstow, rh Paul

Burt, Lorely

Byles, Dan

Cable, rh Vince

Cairns, Alun

Carmichael, rh Mr Alistair

Carmichael, Neil

Carswell, Mr Douglas

Cash, Mr William

Chishti, Rehman

Chope, Mr Christopher

Clark, rh Greg

Clarke, rh Mr Kenneth

Clifton-Brown, Geoffrey

Coffey, Dr Thérèse

Collins, Damian

Colvile, Oliver

Crabb, Stephen

Crockart, Mike

Crouch, Tracey

Davies, Philip

Davis, rh Mr David

de Bois, Nick

Djanogly, Mr Jonathan

Dorrell, rh Mr Stephen

Dorries, Nadine

Doyle-Price, Jackie

Drax, Richard

Duddridge, James

Duncan, rh Mr Alan

Duncan Smith, rh Mr Iain

Ellis, Michael

Ellison, Jane

Ellwood, Mr Tobias

Eustice, George

Evans, Graham

Evans, Jonathan

Evennett, Mr David

Fabricant, Michael

Farron, Tim

Fox, rh Dr Liam

Francois, rh Mr Mark

Freer, Mike

Fuller, Richard

Gale, Sir Roger

Garnier, Sir Edward

Gauke, Mr David

George, Andrew

Gibb, Mr Nick

Gilbert, Stephen

Gillan, rh Mrs Cheryl

Glen, John

Goldsmith, Zac

Goodwill, Mr Robert

Graham, Richard

Grant, Mrs Helen

Gray, Mr James

Grayling, rh Chris

Green, rh Damian

Greening, rh Justine

Griffiths, Andrew

Gummer, Ben

Gyimah, Mr Sam

Halfon, Robert

Hames, Duncan

Hammond, rh Mr Philip

Hancock, Matthew

Hands, Greg

Harper, Mr Mark

Harris, Rebecca

Hart, Simon

Harvey, Sir Nick

Haselhurst, rh Sir Alan

Heath, Mr David

Heaton-Harris, Chris

Hemming, John

Henderson, Gordon

Hendry, Charles

Herbert, rh Nick

Hoban, Mr Mark

Hollingbery, George

Hollobone, Mr Philip

Holloway, Mr Adam

Horwood, Martin

Howarth, Sir Gerald

Howell, John

Huhne, rh Chris

Hunt, rh Mr Jeremy

Huppert, Dr Julian

Hurd, Mr Nick

Jackson, Mr Stewart

James, Margot

Javid, Sajid

Jenkin, Mr Bernard

Johnson, Gareth

Johnson, Joseph

Jones, Andrew

Jones, Mr Marcus

Kawczynski, Daniel

Kelly, Chris

Kennedy, rh Mr Charles

Kirby, Simon

Knight, rh Mr Greg

Laing, Mrs Eleanor

Lamb, Norman

Lancaster, Mark

Lansley, rh Mr Andrew

Laws, rh Mr David

Leadsom, Andrea

Lee, Jessica

Lee, Dr Phillip

Lefroy, Jeremy

Leigh, Mr Edward

Leslie, Charlotte

Liddell-Grainger, Mr Ian

Lilley, rh Mr Peter

Lloyd, Stephen

Lopresti, Jack

Lord, Jonathan

Luff, Peter

Lumley, Karen

Macleod, Mary

Main, Mrs Anne

Maude, rh Mr Francis

Maynard, Paul

McCartney, Jason

McCartney, Karl

McIntosh, Miss Anne

McVey, Esther

Menzies, Mark

Metcalfe, Stephen

Miller, rh Maria

Mills, Nigel

Milton, Anne

Mitchell, rh Mr Andrew

Moore, rh Michael

Mordaunt, Penny

Morgan, Nicky

Morris, Anne Marie

Morris, James

Mosley, Stephen

Mowat, David

Mulholland, Greg

Mundell, rh David

Munt, Tessa

Murray, Sheryll

Murrison, Dr Andrew

Newmark, Mr Brooks

Newton, Sarah

Norman, Jesse

Nuttall, Mr David

O'Brien, Mr Stephen

Offord, Dr Matthew

Ollerenshaw, Eric

Opperman, Guy

Ottaway, Richard

Paice, rh Sir James

Parish, Neil

Patel, Priti

Paterson, rh Mr Owen

Pawsey, Mark

Penning, Mike

Penrose, John

Percy, Andrew

Phillips, Stephen

Pincher, Christopher

Poulter, Dr Daniel

Prisk, Mr Mark

Raab, Mr Dominic

Randall, rh Mr John

Reckless, Mark

Redwood, rh Mr John

Reid, Mr Alan

Robathan, rh Mr Andrew

Robertson, rh Hugh

Robertson, Mr Laurence

Rogerson, Dan

Rosindell, Andrew

Rudd, Amber

Ruffley, Mr David

Russell, Sir Bob

Rutley, David

Sanders, Mr Adrian

Sandys, Laura

Scott, Mr Lee

Selous, Andrew

Shapps, rh Grant

Sharma, Alok

Shelbrooke, Alec

Shepherd, Mr Richard

Skidmore, Chris

Smith, Miss Chloe

Smith, Henry

Smith, Julian

Smith, Sir Robert

Soames, rh Nicholas

Soubry, Anna

Spelman, rh Mrs Caroline

Stephenson, Andrew

Stevenson, John

Stewart, Bob

Streeter, Mr Gary

Stride, Mel

Stunell, rh Andrew

Sturdy, Julian

Swayne, rh Mr Desmond

Swinson, Jo

Syms, Mr Robert

Tapsell, rh Sir Peter

Teather, Sarah

Timpson, Mr Edward

Tomlinson, Justin

Tredinnick, David

Uppal, Paul

Vara, Mr Shailesh

Vickers, Martin

Villiers, rh Mrs Theresa

Walker, Mr Charles

Walker, Mr Robin

Wallace, Mr Ben

Walter, Mr Robert

Ward, Mr David

Watkinson, Angela

Weatherley, Mike

Webb, Steve

Wharton, James

Wheeler, Heather

White, Chris

Whittaker, Craig

Whittingdale, Mr John

Wiggin, Bill

Willetts, rh Mr David

Williams, Mr Mark

Williams, Roger

Williams, Stephen

Williamson, Gavin

Willott, Jenny

Wilson, Mr Rob

Wollaston, Dr Sarah

Wright, Jeremy

Young, rh Sir George

Tellers for the Noes:

Karen Bradley and

Mark Hunter

Question accordingly negatived.

17 Oct 2012 : Column 365

17 Oct 2012 : Column 366

17 Oct 2012 : Column 367

17 Oct 2012 : Column 368

Amendments made: 8, page 8, leave out lines 22 to 27 and insert—

‘(1) Evidence of pre-termination negotiations is inadmissible in any proceedings on a complaint under section 111.

This is subject to subsections (2) to (4).

(1A) In subsection (1) “pre-termination negotiations” means any offer made or discussions held, before the termination of the employment in question, with a view to it being terminated on terms agreed between the employer and the employee.’.

Amendment 9, page 8, line 36, leave out from beginning to second ‘to’ in line 37 and insert

‘Subsection (1) does not affect the admissibility, on any question as to costs or expenses, of evidence relating’.

Amendment 10, page 8, leave out lines 40 to 43.—(Jo Swinson.)

Clause 13

Power by order to increase or decrease limit of compensatory award

Amendment proposed: 82, page 9, line 1, leave out clause 13.

Question put, That the amendment be made.

The House divided:

Ayes 223, Noes 290.

Division No. 77]

[3.9 pm

AYES

Abbott, Ms Diane

Abrahams, Debbie

Ainsworth, rh Mr Bob

Alexander, Heidi

Ali, Rushanara

Allen, Mr Graham

Anderson, Mr David

Austin, Ian

Bailey, Mr Adrian

Bain, Mr William

Balls, rh Ed

Banks, Gordon

Barron, rh Mr Kevin

Beckett, rh Margaret

Begg, Dame Anne

Benn, rh Hilary

Benton, Mr Joe

Berger, Luciana

Betts, Mr Clive

Blackman-Woods, Roberta

Blenkinsop, Tom

Blomfield, Paul

Blunkett, rh Mr David

Bradshaw, rh Mr Ben

Brennan, Kevin

Brown, Lyn

Brown, rh Mr Nicholas

Brown, Mr Russell

Bryant, Chris

Burden, Richard

Burnham, rh Andy

Byrne, rh Mr Liam

Campbell, Mr Alan

Campbell, Mr Ronnie

Clark, Katy

Clarke, rh Mr Tom

Coaker, Vernon

Coffey, Ann

Connarty, Michael

Cooper, Rosie

Cooper, rh Yvette

Corbyn, Jeremy

Crausby, Mr David

Creagh, Mary

Creasy, Stella

Cruddas, Jon

Cryer, John

Cunningham, Alex

Cunningham, Mr Jim

Dakin, Nic

Danczuk, Simon

Darling, rh Mr Alistair

David, Wayne

Davidson, Mr Ian

Davies, Geraint

De Piero, Gloria

Denham, rh Mr John

Dobbin, Jim

Dobson, rh Frank

Docherty, Thomas

Donohoe, Mr Brian H.

Doran, Mr Frank

Dowd, Jim

Doyle, Gemma

Dromey, Jack

Dugher, Michael

Durkan, Mark

Eagle, Ms Angela

Eagle, Maria

Edwards, Jonathan

Efford, Clive

Elliott, Julie

Engel, Natascha

Esterson, Bill

Evans, Chris

Field, rh Mr Frank

Fitzpatrick, Jim

Flello, Robert

Flint, rh Caroline

Fovargue, Yvonne

Francis, Dr Hywel

Gapes, Mike

Gilmore, Sheila

Glass, Pat

Glindon, Mrs Mary

Godsiff, Mr Roger

Goodman, Helen

Greatrex, Tom

Green, Kate

Griffith, Nia

Hain, rh Mr Peter

Hamilton, Fabian

Harman, rh Ms Harriet

Harris, Mr Tom

Havard, Mr Dai

Healey, rh John

Hendrick, Mark

Hepburn, Mr Stephen

Hermon, Lady

Heyes, David

Hillier, Meg

Hilling, Julie

Hodge, rh Margaret

Hodgson, Mrs Sharon

Hoey, Kate

Hopkins, Kelvin

Hosie, Stewart

Hunt, Tristram

Irranca-Davies, Huw

Jackson, Glenda

James, Mrs Siân C.

Jamieson, Cathy

Jarvis, Dan

Johnson, rh Alan

Johnson, Diana

Jones, Graham

Jones, Helen

Jones, Mr Kevan

Jones, Susan Elan

Joyce, Eric

Kaufman, rh Sir Gerald

Keeley, Barbara

Kendall, Liz

Khan, rh Sadiq

Lavery, Ian

Leslie, Chris

Lewis, Mr Ivan

Lloyd, Tony

Llwyd, rh Mr Elfyn

Long, Naomi

Lucas, Caroline

Lucas, Ian

MacNeil, Mr Angus Brendan

MacShane, rh Mr Denis

Mactaggart, Fiona

Mahmood, Mr Khalid

Mahmood, Shabana

Malhotra, Seema

Mann, John

Marsden, Mr Gordon

McCabe, Steve

McCann, Mr Michael

McCarthy, Kerry

McClymont, Gregg

McDonnell, Dr Alasdair

McDonnell, John

McGovern, Alison

McGovern, Jim

McGuire, rh Mrs Anne

McKechin, Ann

McKenzie, Mr Iain

McKinnell, Catherine

Meacher, rh Mr Michael

Mearns, Ian

Michael, rh Alun

Miller, Andrew

Mitchell, Austin

Moon, Mrs Madeleine

Morden, Jessica

Morrice, Graeme

(Livingston)

Morris, Grahame M.

(Easington)

Mudie, Mr George

Munn, Meg

Murphy, rh Mr Jim

Murray, Ian

Nandy, Lisa

Nash, Pamela

Onwurah, Chi

Osborne, Sandra

Owen, Albert

Pearce, Teresa

Perkins, Toby

Phillipson, Bridget

Pound, Stephen

Qureshi, Yasmin

Reed, Mr Jamie

Reeves, Rachel

Reynolds, Emma

Riordan, Mrs Linda

Ritchie, Ms Margaret

Robinson, Mr Geoffrey

Roy, Mr Frank

Roy, Lindsay

Ruane, Chris

Ruddock, rh Dame Joan

Sarwar, Anas

Shannon, Jim

Sharma, Mr Virendra

Sheerman, Mr Barry

Sheridan, Jim

Shuker, Gavin

Skinner, Mr Dennis

Slaughter, Mr Andy

Smith, rh Mr Andrew

Smith, Angela

Smith, Owen

Spellar, rh Mr John

Straw, rh Mr Jack

Stringer, Graham

Stuart, Ms Gisela

Sutcliffe, Mr Gerry

Tami, Mark

Thomas, Mr Gareth

Thornberry, Emily

Timms, rh Stephen

Trickett, Jon

Turner, Karl

Twigg, Derek

Umunna, Mr Chuka

Vaz, rh Keith

Vaz, Valerie

Watson, Mr Tom

Watts, Mr Dave

Weir, Mr Mike

Whiteford, Dr Eilidh

Williams, Hywel

Williamson, Chris

Winnick, Mr David

Winterton, rh Ms Rosie

Wishart, Pete

Woodward, rh Mr Shaun

Wright, David

Wright, Mr Iain

Tellers for the Ayes:

Phil Wilson and

Mr David Hamilton

NOES

Adams, Nigel

Afriyie, Adam

Amess, Mr David

Andrew, Stuart

Arbuthnot, rh Mr James

Bacon, Mr Richard

Baker, Norman

Baker, Steve

Baldry, Sir Tony

Baldwin, Harriett

Barclay, Stephen

Barker, rh Gregory

Baron, Mr John

Barwell, Gavin

Bebb, Guto

Beith, rh Sir Alan

Bellingham, Mr Henry

Beresford, Sir Paul

Bingham, Andrew

Binley, Mr Brian

Birtwistle, Gordon

Blackman, Bob

Blackwood, Nicola

Blunt, Mr Crispin

Boles, Nick

Bone, Mr Peter

Bradley, Karen

Brake, rh Tom

Bray, Angie

Brazier, Mr Julian

Bridgen, Andrew

Brine, Steve

Brokenshire, James

Brooke, Annette

Bruce, Fiona

Bruce, rh Sir Malcolm

Buckland, Mr Robert

Burley, Mr Aidan

Burns, Conor

Burns, rh Mr Simon

Burrowes, Mr David

Burstow, rh Paul

Burt, Alistair

Burt, Lorely

Byles, Dan

Cable, rh Vince

Cairns, Alun

Campbell, Mr Gregory

Carmichael, rh Mr Alistair

Carmichael, Neil

Carswell, Mr Douglas

Cash, Mr William

Chishti, Rehman

Chope, Mr Christopher

Clarke, rh Mr Kenneth

Clifton-Brown, Geoffrey

Coffey, Dr Thérèse

Collins, Damian

Colvile, Oliver

Crabb, Stephen

Crockart, Mike

Crouch, Tracey

Davies, Glyn

Davies, Philip

Davis, rh Mr David

de Bois, Nick

Djanogly, Mr Jonathan

Donaldson, rh Mr Jeffrey M.

Dorries, Nadine

Doyle-Price, Jackie

Drax, Richard

Duddridge, James

Duncan, rh Mr Alan

Duncan Smith, rh Mr Iain

Ellis, Michael

Ellison, Jane

Ellwood, Mr Tobias

Eustice, George

Evans, Graham

Evans, Jonathan

Evennett, Mr David

Fabricant, Michael

Farron, Tim

Fox, rh Dr Liam

Freer, Mike

Fuller, Richard

Gale, Sir Roger

Garnier, Sir Edward

Gauke, Mr David

George, Andrew

Gibb, Mr Nick

Gilbert, Stephen

Gillan, rh Mrs Cheryl

Glen, John

Goldsmith, Zac

Goodwill, Mr Robert

Gove, rh Michael

Graham, Richard

Grant, Mrs Helen

Gray, Mr James

Grayling, rh Chris

Green, rh Damian

Greening, rh Justine

Griffiths, Andrew

Gummer, Ben

Gyimah, Mr Sam

Halfon, Robert

Hames, Duncan

Hancock, Matthew

Hands, Greg

Harper, Mr Mark

Harris, Rebecca

Hart, Simon

Harvey, Sir Nick

Haselhurst, rh Sir Alan

Heath, Mr David

Heaton-Harris, Chris

Hemming, John

Hendry, Charles

Herbert, rh Nick

Hinds, Damian

Hoban, Mr Mark

Hollingbery, George

Hollobone, Mr Philip

Holloway, Mr Adam

Horwood, Martin

Howarth, Sir Gerald

Howell, John

Hughes, rh Simon

Huhne, rh Chris

Hunt, rh Mr Jeremy

Huppert, Dr Julian

Hurd, Mr Nick

Jackson, Mr Stewart

James, Margot

Javid, Sajid

Jenkin, Mr Bernard

Johnson, Gareth

Johnson, Joseph

Jones, Andrew

Jones, rh Mr David

Jones, Mr Marcus

Kawczynski, Daniel

Kelly, Chris

Kennedy, rh Mr Charles

Kirby, Simon

Knight, rh Mr Greg

Laing, Mrs Eleanor

Lamb, Norman

Lancaster, Mark

Lansley, rh Mr Andrew

Laws, rh Mr David

Leadsom, Andrea

Lee, Jessica

Lee, Dr Phillip

Lefroy, Jeremy

Leigh, Mr Edward

Leslie, Charlotte

Liddell-Grainger, Mr Ian

Lilley, rh Mr Peter

Lopresti, Jack

Lord, Jonathan

Loughton, Tim

Luff, Peter

Lumley, Karen

Macleod, Mary

Main, Mrs Anne

Maude, rh Mr Francis

Maynard, Paul

McCartney, Jason

McCartney, Karl

McCrea, Dr William

McIntosh, Miss Anne

McPartland, Stephen

McVey, Esther

Menzies, Mark

Mercer, Patrick

Metcalfe, Stephen

Miller, rh Maria

Mills, Nigel

Milton, Anne

Mitchell, rh Mr Andrew

Moore, rh Michael

Mordaunt, Penny

Morgan, Nicky

Morris, Anne Marie

Morris, James

Mosley, Stephen

Mowat, David

Mulholland, Greg

Mundell, rh David

Munt, Tessa

Murray, Sheryll

Murrison, Dr Andrew

Neill, Robert

Newmark, Mr Brooks

Newton, Sarah

Norman, Jesse

Nuttall, Mr David

O'Brien, Mr Stephen

Offord, Dr Matthew

Ollerenshaw, Eric

Opperman, Guy

Ottaway, Richard

Paice, rh Sir James

Paisley, Ian

Parish, Neil

Patel, Priti

Paterson, rh Mr Owen

Pawsey, Mark

Penning, Mike

Penrose, John

Percy, Andrew

Phillips, Stephen

Pincher, Christopher

Prisk, Mr Mark

Raab, Mr Dominic

Randall, rh Mr John

Reckless, Mark

Redwood, rh Mr John

Reid, Mr Alan

Robathan, rh Mr Andrew

Robertson, rh Hugh

Robertson, Mr Laurence

Rogerson, Dan

Rosindell, Andrew

Rudd, Amber

Ruffley, Mr David

Russell, Sir Bob

Rutley, David

Sanders, Mr Adrian

Sandys, Laura

Scott, Mr Lee

Selous, Andrew

Shapps, rh Grant

Sharma, Alok

Shelbrooke, Alec

Shepherd, Mr Richard

Simmonds, Mark

Simpson, David

Skidmore, Chris

Smith, Miss Chloe

Smith, Henry

Smith, Julian

Smith, Sir Robert

Soames, rh Nicholas

Soubry, Anna

Spelman, rh Mrs Caroline

Stephenson, Andrew

Stevenson, John

Stewart, Bob

Streeter, Mr Gary

Stride, Mel

Stunell, rh Andrew

Sturdy, Julian

Swales, Ian

Swayne, rh Mr Desmond

Swinson, Jo

Tapsell, rh Sir Peter

Teather, Sarah

Timpson, Mr Edward

Tomlinson, Justin

Turner, Mr Andrew

Uppal, Paul

Vara, Mr Shailesh

Vickers, Martin

Villiers, rh Mrs Theresa

Walker, Mr Charles

Walker, Mr Robin

Wallace, Mr Ben

Walter, Mr Robert

Ward, Mr David

Watkinson, Angela

Weatherley, Mike

Wharton, James

Wheeler, Heather

White, Chris

Whittaker, Craig

Whittingdale, Mr John

Wiggin, Bill

Willetts, rh Mr David

Williams, Mr Mark

Williams, Roger

Williams, Stephen

Willott, Jenny

Wilson, Mr Rob

Wilson, Sammy

Wollaston, Dr Sarah

Wright, Jeremy

Young, rh Sir George

Tellers for the Noes:

Mark Hunter and

Mr Robert Syms

Question accordingly negatived.

17 Oct 2012 : Column 369

17 Oct 2012 : Column 370

17 Oct 2012 : Column 371

17 Oct 2012 : Column 372

Amendments made: 11, page 9, leave out lines 8 to 10 and insert—

‘(b) the lower of—

(i) a specified amount, and

(ii) a specified number multiplied by a week’s pay of the individual concerned.’.

Amendment 12, page 9, line 11, after ‘(2)(a)’ insert ‘or (b)(i)’.

Amendment 13, page 9, line 13, after ‘(2)(a)’ insert ‘or (b)(i)’.

Amendment 14, page 9, line 16, after ‘(2)(b)’ insert ‘(ii)’.

Amendment 15, page 9, line 38, after ‘13(2)(b)’ insert ‘(ii)’.—(Jo Swinson.)

Clause 17

Renaming of “compromise agreements”, “compromise contracts” and “compromises”

Amendments made: 16, page 12, line 23, leave out paragraph (c).

Amendment 17, page 12, line 35, at end insert—

‘(2A) In section 49 of the National Minimum Wage Act 1998 (restrictions on contracting out)—

(a) in subsections (3) and (4), for “compromise” (in each place where it occurs) substitute “settlement”;

(b) after subsection (8) insert—

(8A) In the application of this section in relation to Northern Ireland, subsections (3) and (4) above shall have effect as if for “settlement agreements” (in each place) there were substituted “compromise agreements.”’.—(Jo Swinson.)

17 Oct 2012 : Column 373

New Clause 22

Interpretation of the green purposes: duty to assess impact on the Climate Change Act 2008

‘(1) In interpreting the purposes in section 1(1)(a) to (e), it is the duty of the UK Green Investment Bank to assess whether the implementation of its investment strategy, or similar document outlining or amending the proposed investment portfolio of the UK Green Investment Bank will, as a whole, increase the likelihood of achieving carbon budgets and greenhouse reduction targets as set out under the Climate Change Act 2008.

(2) In subsection (1), whether or not an investment strategy will increase the likelihood of achieving carbon budgets and greenhouse gas reduction targets shall be assessed compared to a scenario where identified investments or investment categories did not proceed.

(3) In undertaking the assessment required under subsection (1), it is the duty of the UK Green Investment Bank to have regard to the advice and reports of the Committee on Climate Change required under sections 34, 36 and 38 of the Climate Change Act 2008.

(4) The Board must make a decision to adopt or amend its investment strategy or similar document described in subsection (1), unless it is satisfied, as a result of the assessment in subsection (1), that the proposed investment portfolio will, as a whole, increase the likelihood of achieving carbon budgets and greenhouse gas reduction targets under the Climate Change Act 2008.’.—(Mr Iain Wright.)

Brought up, and read the First time.

Mr Iain Wright: I beg to move, That the clause be read a Second time.

Mr Deputy Speaker (Mr Lindsay Hoyle): With this it will be convenient to discuss the following:

New clause 25—The UK Green Investment Bank: prohibition on investment in nuclear power or the nuclear industry

‘The UK Green Investment Bank may not engage in activities that involve facilitating or encouraging investment in nuclear power or the nuclear industry.’.

Amendment 77, page 1, line 11, clause 1, at end add—

‘(3) In undertaking investments in accordance with the green purposes outlined in subsection (1), the UK Green Investment Bank will identify opportunities in which small and medium-sized enterprises can be awarded contracts.’.

Government amendments 1 to 3.

Amendment 76, page 3, line 24, clause 4, at end add—

‘(7) Subject to the approval by the European Commission of the State aid notification concerning the establishment of the UK Green Investment Bank, the Secretary of State shall provide the European Commission with State aid notification concerning the intention to allow the Bank to borrow, including borrowing from the capital markets.

(8) The duty in subsection (7) must be fulfilled no later than 31 December 2013.

(9) It is the duty of HM Treasury and the Secretary of State to either—

(a) permit the UK Green Investment Bank to begin borrowing from the capital markets by April 2015, or

(b) to present to Parliament a report within one month of the passage of this Act giving a clear, certain, alternative date for the UK Green Investment Bank to begin borrowing, based on Office for Budget Responsibility forecasts for the public finances and advice from the Green Investment Bank on its need for borrowing powers,

both subject to the European Commission approving the State aid notification concerning borrowing.’.

17 Oct 2012 : Column 374

Amendment 89, page 3, line 24, clause 4, at end add—

‘( ) Subject to approval by the European Commission of the State aid notification concerning the establishment of the UK Green Investment Bank, it is the duty of the Secretary of State to provide the European Commission with State aid notification concerning the intention to allow the Bank to borrow, including borrowing from the capital markets.

( ) The duty in the above subsection must be fulfilled no later than 31 December 2013.

( ) In the event the European Commission approves the State aid notification concerning borrowing, it is the duty of the Treasury and of the Secretary of State to permit the Green Investment Bank to begin borrowing from the capital markets no later than 30 June 2015, or, if State aid approval has not been received by that date, no later than one month from the date of approval.’.

Government amendments 4 and 5.

Amendment 78, page 4, line 9, clause 6, at end add—

‘(5) The Secretary of State will be required to receive independent expert review of the performance of the UK Green Investment Bank.

(6) The Secretary of State will be required to receive such a review no less than every five years.

(7) An interim review no less frequently than every two and half years.

(8) The independent expert review in subsection (5) must, in particular, include or contain information relating to—

(a) an assessment of the UK Green Investment Bank’s environmental performance in fulfilling the green purposes as set out in section 1.

(b) an analysis of the main trends and factors likely to affect the future development, performance and investments of the UK Green Investment bank,

(c) macroeconomic analysis, including assessments of demand in the UK economy and international factors likely to affect green investment and skills within the relevant industries,

(d) assessment of the competitiveness of the UK Green Investment Bank in securing competitive advantage for the UK in green and low carbon economies relative to other countries, and

(e) recommendations to improve the UK Green Investment Bank’s impact in fulfilling its green purposes in section 1.

(9) Prior to the commencement of a review in relation to subsection (5), the Secretary of State must request the views of—

(a) The Secretary of State for Energy and Climate Change,

(b) The Secretary of State for Environment, Food and Rural Affairs,

(c) The Committee on Climate Change,

(d) Ministers from the devolved administrations,

(e) investors and interested parties, and

(f) members of the public,

and provide a copy of the results of the consultations to the person or persons undertaking the independent review.

(10) The Secretary of State, in the capacity of shareholder, must provide such information as he considers reasonable to enable the person or body undertaking the review to fulfil the requirements of this subsection.

(11) A review made in relation to subsection (5) must be published and laid before both Houses of Parliament.’.

Mr Wright: Those hon. Members who served on the Committee will recall that we spent a great deal of time considering whether the green purposes of the green investment bank, as set out in clause 1, were appropriate—namely, whether they were too restrictive or limiting to

17 Oct 2012 : Column 375

prevent long-term investment in innovative low-carbon technologies or too wide or broad as to mean that high-carbon investments could not be considered by the bank. As I said, we deliberated over this issue in Committee at length.

Of the five criteria, only one needs to be met to justify the appropriateness of investment by the bank. Was clause 1(1)(b), which refers to

“the advancement of efficiency in the use of natural resources”,

sufficiently tight and robust to deal with the need to ensure that the green economy and the transition to a low-carbon economy are put into effect? In Committee, I used the example of a gas-fired power station that might be marginally more efficient in its use of the earth’s natural resources given 2012 levels, but might well be seen as hopelessly dirty and inefficient by 2030.

That is the purpose of new clause 22—to deal with concerns that investments by the bank might not be in keeping with its green purposes, or at least the spirit behind those purposes. That is why we thought that making an explicit link with the Climate Change Act 2008 would be the best way for an appropriate balance to be struck between giving the bank the flexibility to consider its investment portfolio and ensuring that it cannot and does not decide to fund high-carbon investments. New clause 22 therefore proposes that the green investment bank assesses whether its investment portfolio helps the achievement of carbon budget and greenhouse reduction targets as set out under the 2008 legislation.

Jonathan Edwards (Carmarthen East and Dinefwr) (PC): Do the criteria that the hon. Gentleman has noted extend to nuclear energy?

Mr Wright: We can consider that when hon. Members debate new clause 25. We had considerable debate about it in Committee. The question now is: what is the purpose of the green investment bank? Is it to ensure that we can kick-start innovative technologies that cannot have market buy-in, or is it a question of ensuring that the targets set out in the 2008 Act are met? There is a conflict there, which we considered in Committee at some length. I think that there is potential to consider nuclear, certainly in respect of the nuclear supply chain and ensuring that we can achieve these objectives. I am keen to hear the debate on this matter in the next few moments. It is important to probe the Government on whether this is an appropriate avenue for the bank to invest in.

Neil Carmichael (Stroud) (Con) rose

David Mowat (Warrington South) (Con) rose

Mr Wright: I shall give way to two eminent members of the Public Bill Committee, but I must bear in mind the fact that we do not have time to debate these issues at length.

Neil Carmichael: I thank the hon. Gentleman for that generous introduction. I am glad I stood up when I did. The danger of the shadow Minister’s speech so far is that he is focusing on energy, where, of course, a green investment bank should be considering many other technologies and many issues other than energy. That is one of the problems with new clause 22.

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Mr Wright: I understand that. The hon. Gentleman will recall that I posed a number of questions in Committee: could the green investment bank invest in forests or in the supply chain for the automotive industry to ensure that we have low-carbon engines? There was a whole range of different debates in Committee, which I thought were useful. As I said, there is a balance to be struck, and that is what new clause 22 is about. Is the aim to achieve what we all want to achieve—igniting, for want of a better term, the green economy—or is the provision too prescriptive? There is a balance between being too broad and too narrow.

David Mowat: I thank the shadow Minister, but I am a bit disappointed by the tone of his remarks. I want to get clarity about the point that was raised a few moments ago about nuclear, so that I can understand the position of those on the Opposition Front Bench. Would Sheffield Forgemasters, for example, which is a nuclear supply chain company, be eligible for assistance from the bank?

Mr Wright: The hon. Gentleman will recall that I mentioned this issue at length in Committee, when he quite rightly probed me on it. I reiterate my answer to the hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards) a few moments ago. There is a conflict here. What is the purpose of the green investment bank: is it to ensure that we have innovative technologies where there is current market failure making it difficult to get investment, or is it to ensure that we do as much as possible to tackle carbon emissions, meet low-carbon targets and so forth? Within that, nuclear could be a source of investment.

Caroline Lucas (Brighton, Pavilion) (Green) rose

Mr Wright: Before I give way, I should declare an interest in that I have a nuclear power station in my constituency. I would quite like another one, and I think that part of that supply chain could be considered by the green investment bank. I would certainly like more clarity on this from the Government.

The Parliamentary Under-Secretary of State for Skills (Matthew Hancock) rose

Mr Wright: I shall give way to the hon. Member for Brighton, Pavilion (Caroline Lucas) first, and then to the Minister.

Caroline Lucas: To be honest, I do not see this contradiction. Given that nuclear takes so long to get up and running, it is not going to help us to meet our carbon targets fast enough. It also requires Government subsidy, which is why the whole of the EMR—electricity market reform—is being rigged to deal with that. Also, the jobs that we hope the green investment bank will create will surely be jobs that we would like to see here in the UK. If we use the bank to subsidise nuclear, what we are doing is basically subsidising jobs in places like Russia, China and France.

Mr Wright: I shall come on to this in a few moments. Because of a huge lack of clarity in the Government’s energy policy—anywhere, but particularly in respect of the renewable energy component—many foreign investors will not view the UK as the destination of choice for investment in any case. We have huge potential to be the market leader for renewable and low-carbon technologies,

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but I think we are missing a trick when it comes to the scale of ambition and the time scale of the green investment bank. The purpose of the new clause is to probe and challenge the Government to ensure that we make this part of a growth strategy rather than to allow it to happen somewhere in the future in a way that makes it virtually meaningless.

Matthew Hancock: Given the shortage of time, it may be helpful if I deal with two points now. I can confirm first that the European Commission has granted state aid approval to the green investment bank, and secondly that the Commission strongly discouraged the inclusion of nuclear in our application for state aid. Its inclusion would have delayed approval, and nuclear projects are therefore not in scope in respect of the current application.

Mr Wright: I thank the Minister for his clarification. It is somewhat at odds with what was said in Committee by the then Minister, the hon. Member for North Norfolk (Norman Lamb), but we are where we are—and I am very grateful to the Minister for his announcement about the state aid application, because it gets rid of at least a paragraph of my speech.

Let me now deal with amendment 76, which makes an important point about what the green investment bank should be doing in the light of its potential, the huge opportunities that it provides, and the equally huge scale of the challenge presented by the need for us to decarbonise our economy. If we are to achieve what we want to achieve, we need active government. Working with business, the Government must assess our present comparative advantage in this sector, and work out how we can maintain or enhance that advantage in the future.

3.30 pm

There is a huge, pressing need for policy certainty for investors in the green economy, but so far the Government have not been able to provide it, to the detriment of the country’s chances—this is relevant to what was said by the hon. Member for Brighton, Pavilion—and the chances for jobs and growth.

Only last week, seven of the world’s largest energy and engineering firms wrote to the Chancellor asking for greater certainty in energy policy to kick-start green manufacturing investment. The Timesreported that such companies as Siemens, Alstom UK, Mitsubishi Power Systems, Areva, Doosan, Gamesa and Vestas had warned that while they saw

“potential for significant further investment to support the UK’s move to low carbon generation”,

that investment would fail to materialise if the Chancellor and the Government did not take steps to address the high levels of uncertainty and political risk that were afflicting the sector.

David Mowat: Will the hon. Gentleman give way?

Mr Wright: I know that the hon. Gentleman is a keen advocate of manufacturing in this country, but we require policy certainty. I hope that he will address the point made in an excellent article by Camilla Cavendish that appeared in The Times last month. She wrote that

“instead of building the equipment in England”,

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companies were building offshore wind turbines elsewhere:

“These companies remain uncertain about investing in the UK… the impression that the coalition is split has spooked companies whose boards need to commit capital for 20, 30, 50 years, whether in wind or nuclear power, biomass or solar.”

Is not the lack of the long-term certainty that is so necessary undermining the chances of jobs and growth in this crucial area?

David Mowat: I thank the shadow Minister for telling me what I should say in my intervention. What I was going to say was that, although I did not catch the name of every company in the list that he read out, I am pretty sure that the headquarters of all of them are outside the UK—as, by the way, are those of the major manufacturers of offshore wind. And, yes, it is a problem.

Mr Wright: That is why I am pleased that the hon. Gentleman will be supporting our amendment 77—which is intended to promote the growth of small and medium-sized enterprises in the supply chain and to ensure that we can realise the great potential of the green economy—and will object to the Government’s amendments 1 and 3, which state that investment can take place not in the UK but elsewhere. As someone who wants to support manufacturing in the UK and the ability of home-grown businesses to provide jobs, growth and export potential for our companies, he will doubtless be supporting us in the Lobbies.

Mark Lazarowicz (Edinburgh North and Leith) (Lab/Co-op): Time will be limited for later speeches, so let me say this now. My hon. Friend read out a list of companies that had expressed concern about the mixed messages coming from the Government. I know from private discussions that I have had with people in some of those companies that they are very worried about where the Government are going, and want more clarity. The amendment provides a good way of clearing up the confusion created by the Government, and making their commitment stronger again.

Mr Wright: I agree. The same point was made by the CBI, which concluded in a report produced this summer entitled “The Colour of Growth: Maximising the potential of green business”:

“while business wants to keep up the pace, they are equally clear that the government’s current approach is missing the mark, with policy uncertainty, complexity and the lack of a holistic strategy damaging investment prospects.”

The Government and the Minister—when he is listening—must respond to that. They must provide policy certainty so that investment can be made in the UK.

In Committee, when we discussed the green investment bank and its borrowing powers, I said that we had thought long and hard about the issue. At the time the then Minister, the hon. Member for North Norfolk, said:

“The Government have also committed that the Bank will borrow from April 2015”,

although he then qualified that by using the stock phrase

“subject to public sector net debt falling as a percentage of GDP.”—[Official Report, 12 July 2012; Vol. 548, c. 793W.]

However, given the Government’s failures in relation to its own borrowing targets, that commitment is so far from being achieved as to be virtually meaningless.

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I would contend that a deficit reduction plan without an accompanying growth and employment programme is no deficit reduction plan at all.

Ours is one of only two G20 countries in recession. In March, the Office for Budget Responsibility reported that the Government might meet their debt target by the skin of their teeth, but since then borrowing figures have been significantly higher than forecast. The deficit is now going up—borrowing is now going up; it has increased by 22% so far this year, as a direct result of this Government’s policies. Citigroup forecasts that the Treasury may have to borrow £48 billion more than it originally forecast by 2015-16, meaning that the Chancellor’s key fiscal target of having public sector net debt falling as a proportion of GDP by 2015 will not be reached. It is widely anticipated that the Chancellor, in his autumn statement to be held in winter, will have to carry out a humiliating climbdown from that important target of his, based largely on his misguided economic policies.

Where does that leave the green investment bank? At a time when our potential as a leading market for green business is under threat, both from intense overseas competition and from uncertainty from this Government, what impact does this failure of fiscal policy by the Chancellor have on this growth area? That is the context behind our amendment 76. We want the green investment bank to be able to provide a stimulus for growth in our economy as soon as possible, but we are equally mindful of the double-dip recession that the Chancellor’s policies have inflicted on the country. Our amendment would ensure that state aid approval on the green investment bank’s borrowing power would be sought and achieved no later than 31 December 2013. What the Minister has said about that is certainly welcome, but what impact will it have? Does it mean that borrowing will take place earlier than 2015? When does he imagine borrowing from the capital markets will be permitted?

Our amendment proposes that the bank must be able to begin borrowing by April 2015 or, if that is not achievable, Parliament must be provided with a clear and alternative date as to when such borrowing may be permitted, based both on OBR forecasts regarding the state of the public finances and on advice from the green investment bank on the need for borrowing powers to achieve its objectives.

Caroline Lucas: I wonder why the hon. Gentleman is insisting on that caveat, as the position shared by his Front-Bench colleagues not that long ago was unequivocal in saying that as of June 2015 the bank should be permitted to borrow. The Opposition are now moving away from that position and I simply do not understand why. They are watering down what was there before and is contained in my amendment 89.

Mr Wright: My firm policy commitment is to ensure that we have the green investment bank borrowing as soon as possible, as a stimulus to growth. We were mindful of amendments that we tabled in Committee about that, but we also have to consider the appalling financial mess that the Government are dealing with in respect of increased borrowing. Borrowing was going down prior to the general election, but now it is going up. We do not know what the circumstances will be in 2015, so we need to ensure that there can be certainty,

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based on the imperative to have the green investment bank borrowing from the capital markets as soon as possible while being mindful of the need for rigour and discipline in the public finances.

Neil Carmichael: Is it not possible that the green investment bank can encourage other private organisations and banks to step in and start contributing to the green economy, as that is really what this is all about? It is about providing the right confidence, on the basis of a framework of some certainty, which the Minister has asked for and the Government are giving.

Mr Wright: Absolutely, and that is why the hon. Gentleman will be supporting our amendment 77 and rejecting Government amendments 1 and 3.

If our economy has sectoral strengths, it is right, in an active industrial strategy, for the Government to be looking to maximise those strengths. They also need to seek to develop further capabilities, as the hon. Gentleman rightly said, that could lead to greater investment, growth and employment opportunities here in the UK and, we hope, to the exporting, for commercial gain, of some of the work, expertise and capability here. We want economic benefits to flow to companies within the United Kingdom. That is not to defend protectionism, or to deny the need for competition and foreign direct investment, but to ensure that the Government, as part of a fundamental, active, industrial strategy, work with business to see how this country can gain and maintain market advantage.

Neil Carmichael rose

Mr Wright: I cannot resist giving way to the hon. Gentleman again, even though I am conscious of the time, because the manner in which he puts his hand up as if he needs to go to the toilet is so endearing.

Neil Carmichael: I thank the hon. Gentleman for that. It is important to understand the length and complexity of supply chains and that we do not tie ourselves down to thinking that the supply chain is just within Britain, as it goes further than that. We need appropriate co-operation from the supply chain in big operations. The Government are rightly focusing on supply chains more generally, but we need to bear that in mind.

Mr Wright: Absolutely. I think the hon. Gentleman can go to the toilet now. Recent research has concluded that capital expenditure costs for something as important and significant as offshore wind projects, in which my constituency could play a leading part, could fall by a third in the next decade if a greater proportion of the parts were made in the UK. We need to be mindful of that and the Government must work with business to enhance the supply chain possibilities, opportunities and capabilities in the UK. I suggest to the hon. Gentleman, with the greatest of respect, that that is not happening, largely because of policy uncertainty. That is what amendment 77 is designed to address.

Caroline Lucas: The hon. Gentleman is talking passionately about policy certainty, yet his amendment 76 reintroduces uncertainty. I cannot emphasise enough that it is amendment 89 that would ensure that the bank would be able to borrow from 2015. It is actually what the Liberal Democrats agreed at their party conference only a few weeks ago. If the hon. Gentleman wants policy certainty, why will he not support amendment 89?