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Lord Mackay of Ardbrecknish: Much of this territory was debated on the last amendment. I suspect that we shall debate it twice more today. As the Committee knows, the Bill clearly states that the "20" threshold can be decreased by order. It cannot in fact be increased, which is in line with an amendment that was agreed in the other place. That enables the Government to ensure that changes could be made over time, taking into account the experience gained, as I mentioned, in operating the new right and other relevant circumstances, such as the economic conditions at the time. Indeed, the next amendment, which is in my name, will impose on the Government the obligation to look at this issue in four or five years' time and, one way or another, come before the Chamber with a view.

My noble friend Lord Swinfen with his two amendments seeks to commit the Government and future administrations to making specific changes according to a fixed timetable irrespective of the circumstances of the time. I believe that such an approach would be highly unusual in employment legislation. I must say that I have heard no more convincing argument for going down that road than I heard in the last debate for going down the road of only allowing this clause to operate for just a few months, although I accept that the initial view was that it would perhaps last for a year. Indeed, that is a decision we shall come to shortly if the noble Lord, Lord Addington, opposes the Motion that the clause shall stand part of the Bill. The noble Lord indicated that he does not want any protection at all for small employers from this day onwards or from the day of enactment of the Bill.

I suppose that neither my noble friend Lord Swinfen nor the Committee will be surprised to hear that I do not agree with this amendment either. I believe that the position that we have taken is a balanced position, taking into account the considerable number of employees who will be covered by the Act. Let me repeat that. Sometimes, I feel that people come to the statistics of this matter from an entirely wrong direction. It is not a case of how many firms are covered; it is a case of how many people are covered. Eighty per cent. of employees will be covered by the Act.

My noble friend mentioned Northern Ireland and rural areas. If he checks, I think he will find that there are a considerable number of large firms which operate in rural areas. For example, the local authority is usually a fairly large employer in a rural area, as it is elsewhere. Other examples might be British Telecom, British Gas (in an area where there is gas) or an electricity company. Let me say to the noble Lord, Lord Monkswell, that his machiavellian fears are totally unfounded. One would

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have to split a company entirely, completely and absolutely, so that it had under 20 people before one would be able to get away with not observing the provisions of the Act.

Lord Swinfen: On that point, what is the position with company groups, where there are a number of small companies which are ostensibly owned by a group but which are in fact operating together?

4.45 p.m.

Lord Mackay of Ardbrecknish: I thought that that was the answer that I gave. A conglomerate or a mini-conglomerate, however one likes to describe it, is considered as one company. I do not think that one can break up one's company into self-contained operating units. One would have to go to the extent of creating absolutely separate and unrelated companies before one would get out of obeying the terms of the Bill. I shall study what my noble friend said to see whether I have fully answered his question. But I thought that I had answered his question quite clearly. I am satisfied that there is no way out of this, apart from going to very considerable expense.

If we look at this matter in terms of cost or of administrative imposition on the individual running the business—the ground which I believe is more important—on either of those grounds, I doubt whether going to the bother of splitting the company, with all the trouble and hassle, as well as legal fees (dare I say it?) involved, would be a very sensible action. I do not feel that the end result of evading this legislation would in any way be worth going down that particular road.

Interestingly enough, the first downward step that my noble friend wants is to 15 employees. While the total number of firms covered by this part of the Bill would increase by over 50 per cent., that step would bring in a lot of small firms with many people running their own business working very many hours. My slight difficulty here is that I have a very close friend who runs a very small business. I can imagine his reaction, when I go back at the weekend and say, "By the way, we have just put some more burdens on you and more legislation that you have to obey." I should get a flea in my ear very quickly indeed. It would not be the cost, as I tried to explain in the previous amendment, though that has an important part to play. It is the fact that there is another piece of legislation to be understood and, more than that, to be borne in mind every time one needs to take on somebody or somebody leaves and he has to be replaced and one realises the parameters within which one would then have to operate.

Lord Carter: If the noble Lord's friend were employing 21 people, how would he explain it to him?

Lord Mackay of Ardbrecknish: I suspect that if my friend's company were to go up in numbers towards that figure, then he would be beginning to be free of the other things he has to do; namely, to work alongside his employees and all that part and parcel of his small business. He would probably concentrate more on the management of the business of which that is a part.

We could have a little argument about whether the number was 21, 20 or 19. If you are agreeing to draw a line—I suspect that many Members of the Committee

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who oppose me at this moment do not want any line drawn but want any firm, regardless of size, to be caught immediately by this legislation—it seems to me that 20 is a reasonable number.

Lord Rix: I am grateful to the Minister. Perhaps I may ask him one question. Is not the basis of all this an unfortunate idea that people with disabilities who are being employed (or are to be employed) are, frankly, not capable of carrying out the work for which they are employed with 100 per cent. efficiency? That seems to me to lie behind this discrimination. If a person is worthy of his crust, whether disabled or able bodied, he will not be any revenue cost to the company once suitable machinery has been put into place. We hope that access to work machinery and finance will be available. I am a little worried that we are implying that disabled people will, frankly, make inefficient employees.

Lord Mackay of Ardbrecknish: That is not what I am saying. Clearly I am not making myself understood, if that is the implication. I am talking about the burden of obeying the legislation, understanding it, dealing with it and keeping it in mind, especially as it involves this test of reasonableness in what one might do. That is the burden I am discussing, not the point being made by the noble Lord, Lord Rix.

The figures I mentioned earlier in relation to the number of people already employed in small firms shows clearly that the problem posed by the noble Lord does not exist for most small firms. I would not say that there are not a few small firms who would take the view that the noble Lord takes, but that is not my view. I am trying to deal with two burdens: the cost burden, which is of lesser importance, and also the burden of administering the Act, understanding it and keeping it in mind on the few occasions when one employs people.

Unlike a large company where a personnel department probably spends quite a lot of time interviewing and employing people, a small firm with under 20 employees probably does not do that very often. It may have a stable workforce and it may be quite infrequent that it will need to go round the course of taking on a new employee. That adds to its problems. Here we have a little piece of legislation which will not be with the company on a day-to-day basis, perhaps not even on a month-to-month basis. It may have to bring the provisions to the forefront of its mind quite infrequently.

A little has been said regarding the CBI. It seems to be suggested that it represents small companies. I believe—dare I say?—that a little bit of sleight of hand is being practised in saying that. I believe 50 per cent. was the figure given of small businesses belonging to the CBI. That is the way the figure was quoted to me. But that arithmetic is arrived at by counting those small businesses that are members of trade associations and in turn those trade associations are members of the CBI—

Lord Swinfen: My noble friend—

Lord Mackay of Ardbrecknish: Perhaps I may be allowed to finish my sentence.

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Lord Swinfen: My noble friend will forgive a further interruption but that is in fact what I said. My noble friend accuses me of sleight of hand and uses the figures I gave in trying to show that I used sleight of hand. But they are the figures I gave with that description.

Lord Mackay of Ardbrecknish: I apologise to my noble friend. I did not notice that qualification and perhaps one or two of my noble friends did not either. We were therefore a little puzzled as to how the CBI came to have so many—

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