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Lord Ashley of Stoke: Before the Minister responds to those points, will he inform the House whether it is possible for anyone to impose unreasonable burdens on small employers under the terms of the Bill?

Lord Hamilton of Dalzell: The debate about costs for providing equipment to enable a disabled person to work does not describe the full costs to a small business of employing a disabled person. I am involved in the farming business. Nowadays we never specify what the worker will be employed to do because, in a small, struggling business—many such companies have gone out of business during the recent recession—it is essential that everyone should be prepared to turn their hands to anything. Therefore, even if a worker is equipped specifically to do one single job, it does not always suit small businesses to have someone so employed. The employee might have to turn his hand to some other task. If his movement, or whatever it might be, is restricted, he might not be able to comply. However, it would be interesting to have a statistic on how many disabled people are employed by small businesses. I believe that we should find that many are so employed.

4.15 p.m.

Baroness Hollis of Heigham: First, I thank noble Lords for taking part in the debate and welcome the speech of the noble Lord, Lord Campbell of Croy. He made an important point for us about the problems generated by the quota scheme involving an artificial constraint. It is much better to have a comprehensive and inclusive approach so far as is reasonable. I believe that those were his words. I entirely agree with him. I do not wish for one moment to dissociate myself from the Government's position of reasonableness. It would

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be foolish to close down companies by putting on them burdens which make them buckle under. That would clearly be unreasonable. Therefore the noble Lord's position and ours are very much shared.

The noble Baroness, Lady O'Cathain, referred to costs. I realise that she has much experience in this field regarding disabled people. Does she accept that my noble friend Lord Carter addressed her point? The extra and special costs tend to be funded by the access to work scheme. That is a government cost. The figure of £200 was the Government's own estimate of the average cost of modest adaptions to premises which would be required. I give way.

Baroness O'Cathain: If it were stated that the costs involved in employing a disabled person in a company of 20 or fewer employees would be only £200, that might be acceptable. However, the fact is that the cost is open ended. The noble Baroness has already stated that we do not wish to see firms buckle under. But there could well be a real problem.

Baroness Hollis of Heigham: That is a helpful and constructive response. We share the same objective, which suggests that the answer is empirical. We have evidence not only from Devon, but from Norfolk firms which I consulted on the matter through the county council's rights officer which confirms the Devon experience. There is a distinction between disability and sickness. Disability tends to be a constant and predictable state. Sickness may be a more fluctuating condition which generates additional personnel costs. However, for the large majority, a disability or an impairment is more likely to be relatively constant. Experience in Devon and in Norfolk suggests that not only the financial costs but the personnel costs of employing disabled people are entirely acceptable; and that, far from being a burden on companies, those people have proved to be a form of sound investment because they stay with the company. They do not seek other jobs; they do not move on as they receive additional training; and they feed that training back into the company so that everyone gains.

Associated with that factor was the question asked by the noble Lord, Lord Hamilton of Dalzell, as to how many companies employ whom. The best figures that I have are these. Of those companies which employ fewer than 10 employees, 15 per cent. employ a person with a disability. Of those which employ fewer than 50 employees, 30 per cent. have a disabled employee. In the other tranches, the majority of companies will employ disabled people. Therefore it is clear that, for the most part, disabled people do not find their way into small companies. For example, of companies which employ more than 200 people, 76 per cent. employ disabled people, compared with 15 per cent. of companies employing fewer than 10 people.

Lord Mackay of Ardbrecknish: Perhaps I may be helpful. As I said in my main speech, I should not like the message to go out that small firms do not employ disabled people. Nor would I like it to go out that somehow or other the legislation means that such companies can almost discriminate against them; quite the contrary.

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Regarding small firms defined as employing fewer than 20 employees, I am advised that research suggests that somewhere between 25 per cent. and 30 per cent. of disabled employees work in small firms as I have defined them. That seems a considerable number of people, given the fact that 80 per cent. of employees work in firms above that size.

Baroness Hollis of Heigham: I am grateful to the Minister for that intervention. It makes our case for us. If 30 per cent. of firms with fewer than 20 employees can and do employ disabled people, it is clearly a question of coming to terms with modest physical adaptions and the education and information required. Then those firms may freely go on. If such firms can do so, why cannot the other 70 per cent? If smaller firms have almost the same record as medium-sized firms, why do we need to give them the double protection of exclusion as well as reasonable cost?

Lord Mackay of Ardbrecknish: I should learn never to seek to be helpful to the noble Baroness. However, there is a huge difference between a small firm deciding of its own free will in the current circumstances to try to do its best to employ a disabled person and the employer (the owner of a small firm) having to go to all the trouble of knowing, understanding and applying this Bill, which will become an Act. That is the main point of my argument: there is a difference between doing this voluntarily and under compulsion. It is a distinction which may not be too clear to the Opposition, but it is certainly a distinction of which I can assure her that people who run small businesses are only too well aware.

Baroness Hollis of Heigham: The Minister has drawn a distinction which indeed marks a division between us. We do not believe that the right of a disabled person to employment should depend on whether the employer voluntarily wishes to conform to the Bill. That is the question. We do not believe that the decision by an employer to conform to the Bill should be a voluntary activity. The Minister has made my point.

We believe that firms should be required to conform to the law. We have sought to argue that the cost is modest. We want government to be especially helpful to small companies as well as large. We may address that point in subsequent amendments. We therefore believe that the advice and support services which government seek to provide for small companies will be extremely important.

At the end of the day there remains the question which the noble Lord, Lord Ashley, asked. Given that small companies will not be asked to employ anyone with a disability where the disability is relevant to the work and hinders the job to be done—in other words, the disability is irrelevant to the work; the point was again raised by the noble Lord, Lord Hamilton of Dalzell—and given that no company is asked to make such adaptions as would impose unreasonable costs on that company, for the life of me I still do not see why we should exclude small firms at the cost of disabled people's rights. However, it may surprise the Minister that I would prefer to come back to this at Report stage. With the leave of the Committee, I wish to withdraw the amendment.

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The Deputy Chairman of Committees (Lord Murton of Lindisfarne): Is it your Lordships' pleasure that the amendment be withdrawn?

Lord Ashley of Stoke: I wish to put just one question to the noble Lord, because I believe that the House is entitled to an answer. Is it a fact that it will be illegal for anyone to impose an unreasonable burden—

Lord Lucas: I am sorry, but we have passed the point where that can be raised.

A noble Lord: It can be raised on the next amendment.

The Deputy Chairman of Committees: Is it your Lordships' pleasure that the amendment be withdrawn?

Amendment, by leave, withdrawn.

Lord Swinfen moved Amendment No. 53:

Page 5, line 23, leave out ("may") and insert ("shall").

The noble Lord said: I beg to move Amendment No. 53 and at the same time speak to my other amendments, Amendments Nos. 54 and 56. I hope that the noble Lord, Lord Ashley of Stoke, will use this group of amendments to put the question which he was unable to ask a moment ago.

The purpose of the group of amendments is to reduce the size of firm exempted from the employment provisions of the Bill from 20 employees to 10 after five years, to five people after 10 years and to remove the exemption completely after 15 years.

One in six workers is employed in small businesses. The figure is far higher in rural areas; it would be far higher in Wales, Scotland and Northern Ireland. In Northern Ireland, for example, 84 per cent. of firms have fewer than 10 employees, so it is probable that 90 per cent. employ fewer than 20 people. That would mean that only 10 per cent. of the firms in Northern Ireland would be subject to the legislation. It is not really on only to legislate for 10 per cent. of people doing basically the same thing and who are involved in business.

Exemption is not offered to employers employing fewer than 20 employees under the sex and racial discrimination laws. Small businesses are the fastest growing sector of the economy. Clause 7, as it stands, would leave small businesses legally able to discriminate against people with disabilities. Clause 6 requires an employer,

    "to take such steps as it is reasonable, in all the circumstances of the case, for him to have to take".

Regulations under the clause will enable a limit to be put on the costs that an employer could be expected to meet. Obviously, a small employer would not be expected to have the same financial resources as a larger employer. But where it is reasonable for small employers to make accommodations they should be required to do so.

Most disabled people only require minor adjustments to the working environment. I suggest also that it would be reasonable to look at the turnover of the firm in question because some firms obviously run on a small margin and other firms make vast profits.

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During the Second Reading debate in the other place, the Minister for Disabled People, Mr. Hague, agreed that in the United States reasonable accommodation costs nothing in 43 per cent. of cases,

    "because it involved just moving the furniture around or doing something sensible and practical like introducing different working hours. A large proportion of adjustments cost very little".—[Official Report, Commons, 24/1/95; col. 149.]

The Government's compliance cost assessment of the Bill, as we heard, is suggested as being £200 which would be a reasonable average of what an employer might be expected to have to pay to accommodate a disabled employee.

In the other place in the debate on the exemption of small firms, Mr. Hague also said that it,

    "reflects the Government's recognition that it may be more difficult and burdensome for smaller firms to get to grips with the new right".

He told the all-party disablement group that small firms do not have the specialist personnel functions. If the Government's main objection is that small firms do not have the resources in terms of personnel, including information, knowledge and expertise, then why could they not follow the CBI's advice and give more support to small firms together with the phasing in of compliance requirements for smaller businesses, as has happened in the United States of America? The CBI argues against the inevitable arbitrariness of the cut-offs and exclusions.

In his response to the Second Reading debate in this House at col. 887 of Hansard for 22nd May, my noble friend Lord Mackay said that the CBI represents few, if any, employers with fewer than 20 employees. He went on to say that he thought that it would be difficult to find many, if any, of those in its membership. It is my understanding that over 50 per cent. of the businesses that the CBI represents, including those through trade associations and employer organisations, are small businesses with fewer than 20 people. He said that 60 per cent. of firms employing fewer than 10 people had disabled employees. That point has already been made today. He said that the Government welcomed that fact and that the Bill would not prevent them continuing to do that. I quite agree. The codes of practice would encourage them to do so. Surely, the fact that so many small employers employ disabled people shows that if employers have the right attitude, then employing disabled people is not a problem for small firms. I beg to move.

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