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Lord Rix: I am happy to support the amendment clearly moved by the noble Lord, Lord Swinfen. Many of the arguments which will be used when we reach the amendment to be moved by the noble Lord, Lord Gladwin, on Clause 34 have already been rehearsed by the noble Lords, Lord Campbell of Croy and Lord Ashley of Stoke. However, I shall return to the quota system in due course when we reach that amendment.

As to small firms, I have to say at the outset that I have known small businesses where the entire workforce—one person—was disabled. The Minister has stressed that many small employers are good when it comes to employing disabled people. But the Government seem to be speaking against many informed organisations, and many organisations are against them, when it comes to the

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issue of the exclusion of small firms, including many business and employer organisations which might have been thought likely to favour exemption for employers from the new obligations.

I felt some sympathy for the Minister in this House and for his ministerial colleague in another place in trying to defend the exclusion of firms with fewer than 20 employees. I also in my time have had to try to sound convincing on a public stage with a lousy script, but at least I had the advantage of being able to mask that awkwardness by some theatrical business which might not be wholly acceptable in the Palace of Westminster.

Once again, the noble Lord, Lord Swinfen, is being helpful to the Government by taking up their willingness to move forward on a phased timetable and offering them a generously phased timetable for doing so. That phased approach would allow experience of the Bill's provisions to be gained with larger employers. As smaller employers came in, they and their employees would benefit from that experience. However, the test of reasonableness will still relate to the specific circumstances. I see no realistic possibility that what has been required of a very large employer will subsequently be required of a very small employer. Our law and our lawyers are very firm on not following irrelevant precedents.

Given that there are many areas where small employers are the norm and given also that small employers are being created by the break-up—this point is very important at the moment—of larger employees and that many small employers are already abiding by rules from which the Government propose they should be exempted, together with the protection of the "reasonableness" criterion, I support this amendment as one that achieves fairness and logic by generous stages.

4.30 p.m.

Lord Addington: The debate has seemed to revolve around the same idea; namely, why should a small employer be treated differently to a slightly larger employer, and where is the arbitrary line to be drawn? I do not like the clause at all, but these amendments have one thing going for them. They draw down that arbitrary line which we know will act as a staging post to help people to adapt their working practices to new legislation. Thus, the amendments proposed are within the context of the Bill; indeed, they fall within the logic of the Government and suggest measures which should probably have been in the Bill in the first place. Indeed, we are about to debate a government amendment which proposes a review.

We can review things until we are blue in the face. If we do not have the will to change them and we do not accept the terms of logic of any review when it tells us something, things will not be changed. I know that I am jumping slightly ahead of this amendment but all the amendments are related. Unless we accept the fact that we do not want this type of discrimination, an arbitrary line drawn for whatever reason should be removed whenever possible. We have the safety net of reasonableness placed in the Bill. Given that "reasonableness" is not defined, I suggest that the Government will save themselves a lot of time and effort by coming up with a good definition. If

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they intend to rely on this criterion, this is the sort of amendment they should welcome. Thus, I support it. If it is not totally within my sentiments, at least it is within the sentiments of the Bill.

Lord Monson: Those who support this amendment, and who supported the previous one, argue that the costs of compliance will be small. An average figure of £200 was mentioned several times. I suspect that capital expenditure is in the forefront of their minds, and that may well on average be as small as £200. It is a one-off, and can be written off over several years.

Baroness Hollis of Heigham: Perhaps I can help the noble Lord. The figure of £200 comes from the Government's own cost compliance statement of the average cost for a firm to accommodate itself to the provisions of this Bill.

Lord Monson: I entirely understand that. I was not disagreeing with the figure £200 at all. However, I believe that the noble Baroness has totally overlooked the question of current expenditure. Under subsection (3) of Clause 6 any employer obliged to incur expenditure under paragraphs (f), (g), (k) and (l) in combination could well find himself not £200, as a one-off, out of pocket, but thousands of pounds out of pocket—over a thousand pounds at any rate—year after year after year after year. For a firm employing 100 people with, let us say, two disabled employees, such costs could perhaps be absorbed. But for a firm with six employees one of whom is disabled, it could make all the difference between profit and loss, between survival and bankruptcy.

The argument against what I have said lies in the idea of reasonableness. But the term "reasonableness" is entirely subjective: I am glad that the noble Lord, Lord Addington, brought that point out. We have no precise definition of what is reasonable. I suspect that its interpretation will depend to some extent on the whims of the Secretary of State of the day. We are in Henry VIII clause territory, so disliked by my noble and learned friend Lord Simon of Glaisdale and the noble Earl, Lord Russell. Until we get a much firmer test of what is reasonable and what is not, I think—

Baroness Seear: I am sorry to interrupt the noble Lord, but surely "reasonable" is a term used again and again at law. It is a matter that the tribunals then decide. Is that not what it is all about?

Lord Monson: It may be. The press have commented on this Bill, saying that it will provide an absolute bonanza for lawyers, and one can see why that assertion is made. In any case, I think that the Government are on the right lines and I certainly oppose these amendments.

Lord Carter: I did not quite catch the paragraphs to which the noble Lord referred, but there are a number of stipulations under subsection (3) of Clause 6 that would render an employer eligible for the access to work scheme, and the grants will be on a continuing basis.

Lord Monson: I accept that, but I believe it applies to capital rather than current expenditure. Am I not right?

Lord Carter: It applies to both.

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Baroness Lockwood: It seems to me that this whole matter is being completely misunderstood. What is reasonable for a firm with 20 employees may be unreasonable for a firm that has six. Therefore, the interpretation of "reasonableness" will be in the context of the size of the firm, the kind of work that it does, and the resources of that firm.

The Minister argued against the last amendment, saying that it would place an unfair burden on small employers, not only in terms of cost but in terms of the burden of actually understanding the legislation and how it would apply. That argument seems to be completely removed by this particular amendment, which provides for a period of time during which the Act will operate enabling us to find out what is and is not reasonable.

I know that many people hope that not many cases will be brought under this Act. I do not accept that the legislation will mean a lawyers' paradise, but some cases will be brought. Their purpose will be to give an interpretation of what is meant. Very early on we shall need an interpretation of "reasonableness". I was sorry that the Minister was not able to accept the last amendment; but I should have thought that this amendment would be very acceptable to him. Even if a small firm does not have personnel resources, the Act will have been operating and lots of guidance will become available over the course of five years, all of which will be of great assistance to small firms. I really do feel that this whole question of reasonableness is being drawn across the scene as a red herring.

Baroness Seear: There is another point. We are all talking as though small firms are manned by people who are absolute dunderheads. A great many small firms now are doing high quality work and employ highly intelligent people. Quite a lot of them are just as capable of understanding what is in the legislation as people in very large firms. I do not know why we should assume that firms are manned by people who are all stupid just because they are small.

Lord Monkswell: One of the points that we need to recognise is that sometimes legislation has untoward effects. Sometimes the results of legislation are not those for which Parliament planned. I wonder whether we might be coming up against a similar problem in respect of this particular aspect of the Bill. So far as I am aware, there is no bar on a firm effectively subdividing itself so that each unit comprises fewer than 20 employees, each individual part of a company being effectively considered as an individual firm within the meaning of the Act and therefore not falling under the terms of the Act. That is my understanding of the way the legislation will work.

On Tuesday the Minister said that the situation for a firm would effectively change if its size went down from 21 employees to 19 and that the legislative regime would be different. I am worried that, because of people's perception that complying with the Act will be onerous, they will seek to evade its requirements and in so doing hinder the operation of their companies by taking action they would not normally take; for example, by not employing an additional employee which would take the company over the 20 employee mark when it would be in the interests of the company to do so, or by engaging in

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what I might describe as artificial manipulation of the company such as subdividing it into units of less than 20 in order to evade their responsibilities under the Act.

I hope that such things would not happen but we need to be aware that it is a risk. It might happen and it would be detrimental. The reason for such things happening would be the perception that the provisions of the legislation are onerous on business. We need to project the fact that the whole idea of this anti-discrimination legislation is not to put a burden on anybody but to liberate people.

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