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Lord Campbell of Croy: My Lords, I spoke on this point during the first day of Committee on 13th June. I welcome the government amendment which my noble friend then indicated he would bring forward. I am a member of the Select Committee on the Scrutiny of

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Delegated Powers but I speak for myself in the House. The Select Committee's report on the Bill did not draw the attention of the House to this matter because it was not subordinate legislation—regulations—but guidance. This is a precedent, and a good one, because we have all noted that under the guise of guidance very significant matters as important as regulations—perhaps more so—could be issued without Parliament having any chance to discuss them or to throw them out.

In the Bill as originally drafted the guidance had to be laid before both Houses of Parliament but neither House could do anything if it disagreed with it. The negative procedure is appropriate, as I indicated when I spoke on this point on 13th June. My noble friend Lord Renton, who on that occasion moved an amendment proposing the affirmative procedure, also now agrees with that. I rise to speak simply because I believe that this is an important precedent for Bills on other subjects in the future. I am sure that the Government and others concerned will take note that guidance will be an important matter as well as subordinate legislation and regulations.

Lord Swinfen: My Lords, perhaps I may briefly express my support for the group of amendments and ask my noble friend the Minister whether he can advise the House on the following points. Should the guidance need to be altered at any time, will such an alteration have to come before both Houses of Parliament in the same way? What weight will the guidance, once approved by Parliament, have in a court of law or before a tribunal?

Lord Mackay of Ardbrecknish: My Lords, perhaps I may, first, thank your Lordships for the welcome given to my amendments. My noble friend Lord Renton made, if I may so describe it, a nice point when he asked me whether the use of the word "force" in Amendment No. 15 has some significance and whether that indicated that the guidance has a legal standing, together with the backing of legal sanctions. The use of the word "force" in that context does not imply legal sanctions and the rule of law indicated by my noble friend. If he turns to Clause 3(3) of the Bill—and the whole thing has to be read as one—he will see, as indeed will my noble friend Lord Swinfen, that it says:

    "A tribunal or court determining, for any purpose of this Act, whether an impairment has a substantial and long-term adverse effect on a person's ability to carry out normal day-to-day activities, shall take into account any guidance issued under this section which appears to it to be relevant".

I believe that those words clearly show that the guidance is not intended to be binding on the courts and tribunals. Therefore, to that extent, it does not have the force of law. Nevertheless, courts and tribunals will have to take the guidance into account. I hope that that answers the point. In future, perhaps draftsman ought to find another word in case my noble friend has touched upon a serious point in that respect. However, I have no doubt that the draftsmen will read what my noble friend said about the use of the word "force" in the legislation.

As regards the question about revision, my noble friend Lord Swinfen will see that subsection (11) of Amendment No. 15 says:

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    "The Secretary of State may—

    (a) from time to time revise the whole or part of any guidance and re-issue it; [and]

    (b) by order revoke any guidance".

Should the Secretary of State change the guidance, my noble friend asked whether he would have to come back to Parliament and go through the whole procedure again. Indeed, he can be assured that the Secretary of State would have to do so. I hope that those assurances will put my noble friends' minds at rest and that the House will accept my amendments.

On Question, amendment agreed to.

Lord Mackay of Ardbrecknish moved Amendment No. 15:

Page 2, line 23, leave out from beginning to end of line 26 and insert:
("(4) In preparing a draft of any guidance, the Secretary of State shall consult such persons as he considers appropriate.
(5) Where the Secretary of State proposes to issue any guidance, he shall publish a draft of it, consider any representations that are made to him about the draft and, if he thinks it appropriate, modify his proposals in the light of any of those representations.
(6) If the Secretary of State decides to proceed with any proposed guidance, he shall lay a draft of it before each House of Parliament.
(7) If, within the 40-day period, either House resolves not to approve the draft, the Secretary of State shall take no further steps in relation to the proposed guidance.
(8) If no such resolution is made within the 40-day period, the Secretary of State shall issue the guidance in the form of his draft.
(9) The guidance shall come into force on such date as the Secretary of State may appoint by order.
(10) Subsection (7) does not prevent a new draft of the proposed guidance from being laid before Parliament.
(11) The Secretary of State may—
(a) from time to time revise the whole or part of any guidance and re-issue it;
(b) by order revoke any guidance.
(12) In this section—
"40-day period", in relation to the draft of any proposed guidance, means—
(a) if the draft is laid before one House on a day later than the day on which it is laid before the other House, the period of 40 days beginning with the later of the two days, and
(b) in any other case, the period of 40 days beginning with the day on which the draft is laid before each House,
no account being taken of any period during which Parliament is dissolved or prorogued or during which both Houses are adjourned for more than 4 days; and
"guidance" means guidance issued by the Secretary of State under this section and includes guidance which has been revised and re-issued.").

On Question, amendment agreed to.

[Amendment No. 16 not moved.]

Clause 4 [Discrimination against applicants and employees]:

Baroness Hollis of Heigham moved Amendment No. 17:

Page 2, line 29, at beginning insert ("Subject to section 8 below").

The noble Baroness said: My Lords, the amendment returns us to the issue that we discussed in Committee; namely, the exclusion of small firms from the operation

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of the Bill. I should like, therefore, to move Amendment No. 17, which is the paving amendment, and to speak also to the subsequent amendments in the group, especially Amendments Nos. 42 and 44 standing in the name of the noble Lord, Lord Swinfen.

The Bill makes it illegal for companies which employ over 20 people to discriminate unreasonably against disabled people. However, if a firm employs fewer than 20 people, it may discriminate whether or not it is reasonable for it to do so. The point of the amendments is to seek to bring more companies within the purview of the Act. Hence we warmly support the amendment tabled in the name of the noble Lord, Lord Swinfen, which would reduce the exemption of companies to those which employ 10 or fewer people; in other words, what most people would regard as small companies.

Why does this group of amendments matter? Small companies employ 35 per cent. of the working people in this country—17 per cent., if you exclude the self-employed. In much of the country, especially in rural areas in Scotland, in Wales and in Northern Ireland, there are no companies, or very few of them, which employ more than 20 people. If they are to be exempt from the Bill, it means that the legislation will not apply in much of the country. Therefore, huge parts of the country will not fall within the range of the Act. For example, it means that an employer with 18 staff would be able to place discriminatory adverts; he could refuse to interview a disabled person; and he could refuse to consider whether, by adjusting, say, the position of the office furniture, a disabled person might have the opportunity of becoming an effective employee. Do we really want that? Do we really find that acceptable?

However, if the same employer were to expand slightly and take on another two staff, thereby employing 20 people, he would immediately come within the framework of the Act. Why then do we have this cut-off point with the very high figure of 20 so that smaller firms that fall below it are exempt? It comes from the old quota system set up before the war whereby businesses employing more than 20 staff had to employ 3 per cent. disabled people. If one was going to employ 3 per cent., the figure of 20 made some sense; otherwise, one would be dealing with fractions of a person. However, that figure has been imported into legislation 50 years later without, I suggest, any of the justification that underpinned the old quota system.

Subsequent legislation in similar areas, whether it be on health and safety or on sex discrimination, has either had much lower figures or no figures at all for exemption. Certainly most surveys, including those from the Government's Employment Department, often assume that what is meant by "small companies" is 11 people—for example, 10 staff or fewer.

Why are the Government holding on to the figure of 20 as a cut-off point below which firms are exempt from the Act? First, the Government have argued the point on the burden of cost to small firms. I have to say that I do not think that that is true. The Government themselves expect that the average cost of physical adjustments to employ disabled people is around £200. That is not my

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figure or that of disabled people: it is the Government's figure. They believe that the average cost of adapting premises in a small firm to enable it to employ disabled people will, on average, be just £200.

Secondly, small companies, exactly like large ones, are protected from costs if they are unreasonable. If, for example, it would require a lift which was most expensive to make a firm's premises reasonably accessible for the disabled, that would be an unreasonable cost and no employer, whether large or small, need make it. Therefore, a small company is already protected, as indeed is a large one, from doing anything which is unreasonable given its circumstances. In other words, if the cost of employing a disabled person is unreasonable, the firm is not required to spend the money in order to do so.

Similarly, as we discussed in Committee, it is not true that employing disabled people entails unreasonably high costs in personnel terms; for example, as regards turnover or sickness. Indeed, all the evidence from disability organisations suggests that, on the contrary, disabled people have a better and steadier attendance at work than most able-bodied people. Certainly, their record is second to none.

Therefore, the first argument of cost used by the Government against reducing the threshold of exemption is, I suggest to your Lordships, not true. The physical cost—around £200 on average—and the personnel costs are, if anything, nil. The Government's second argument about why we should keep the figure of 20 is that small companies should not have to worry about the burden of regulation.

However, by definition the same small companies which are employing people are companies which market goods or services. They make and sell things. They manufacture goods or produce a service. Therefore, even if, as an employer, they are exempt from this law by virtue of the fact that they employ 18 people, they still have to conform to the law as a seller or provider of goods, services and products. Exempting small firms from the employment provisions does not mean that we are exempting them from the whole array of provisions, but only from one part. They will still have to take on the burden of responsibility of knowing what the legislation requires when it comes to marketing and making available their goods, services and products. Whether small companies like it or not, they still come within the purview of much of this legislation. Therefore, they will need to know the provisions of the legislation irrespective of whether we reduce the employment threshold. Indeed, it could be argued that employing disabled people could make a small company better able to adjust its goods, services and products to meet the needs of disabled people.

So, the first argument used by the Government was that of cost—I do not think that that is a valid argument—and their second argument was that small companies do not want the burden of this legislation. I have tried to suggest that, whether small companies like it or not, they come within the framework of the Bill as producers, manufacturers and suppliers of goods and services. The Government's third argument is that small companies do not want this legislation. I do not deny

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that small businesses are probably unenthusiastic about it. Indeed, there are a lot of things about which small businesses are unenthusiastic, including politicians. Small businesses would prefer not to be burdened by VAT. Small businesses would rather not have to seek planning consent if they want to extend their buildings. Very often, small businesses would prefer not to have to observe health and safety regulations. Very often, small businesses would rather not accord part-timers certain rights in terms of pensions and the like. That is understandable, but that does not mean that it is desirable or that we should support it.

Like all of us, any small business has a responsibility to the community. Equally, any small business can seek advice and guidance from a wealth of organisations, from chambers of commerce to local authorities and enterprise agencies. Small businesses may not be enthusiastic about the legislation, but they can certainly cope with it. In any case, the number of employees is no guide as to whether a company can or cannot afford to employ disabled people. Smaller companies such as legal practices or small information technology firms are well able to deal with the legislation and find disabled people attractive employees. Size has no relation to the value of a company, its turnover, profitability or the type of people that it should employ. Therefore, it is irrelevant to import the figure of 20 into this legislation.

What would be different if your Lordships accepted this amendment and those in the name of the noble Lord, Lord Swinfen? What would change? Well, genuinely small companies—that is, those employing fewer than 10 people, such as corner shops and small start-up businesses—would remain exempt. That would enable the latter to become established. However, we are saying that a company which employs more than 10 people—and certainly one which employs nearer 20—is an established business. There is no reason why it should not conform to the employment provisions of this Bill, just as it must conform to the provisions relating to goods and services. Any costs that are required to enable such a firm to employ disabled people must be reasonable. Under the Bill, no small company can be required to do anything that is unreasonable.

We are asking your Lordships to support an amendment to say that the small companies which it would be reasonable to exempt are those employing fewer than 10 people and that firms which employ more than that number should come within the framework of the Bill. That would allow disabled people across the country to exercise their rights as we would wish them to do. I beg to move.

4 p.m.

Lord Swinfen: My Lords, I thank the noble Baroness for so ably moving Amendment No. 17 and for speaking to the group of amendments. I shall therefore restrict my remarks to my amendments, Amendments Nos. 42 and 44, which, as the noble Baroness said, are designed to increase the number of firms covered by the Bill and the number of employees who will have protection against discrimination on the basis of disability.

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As the noble Baroness said, the Bill as drafted exempts firms with fewer than 20 employees. My two amendments would mean that only firms with fewer than 10 employees would be allowed to discriminate on the ground of disability when employing someone. The noble Baroness mentioned that 35 per cent. of our workforce work for firms with fewer than 20 employees. If the self-employed are excluded, the figure comes down to 17 per cent. If my amendment were accepted, that figure would be reduced further, to 11 per cent. It is, I understand, a fact that women are more likely to work in small firms and that the proportion of small firms is considerably higher in rural areas such as Northern Ireland, Scotland and parts of England. Disabled people in those areas and women who are disabled will thus receive less protection when looking for work if these amendments are not accepted.

The commonsense understanding of what constitutes a small firm is, I feel, closer to 10 than to 20 people. The chief argument put forward by the Government for the exclusion of so-called "small" employers is that they should not have to worry about the additional regulations involved. However, as has already been said, it is curious that the Government propose to exempt such employers only from Part II, not from Part III, of the Bill. If a firm providing a service will not be allowed to discriminate against a disabled person, why—unless it really is a small firm—should it be allowed to discriminate against disabled people when it comes to employment?

In many respects, the amendment is a compromise. A law which permits discrimination by some employers sends the wrong message to all employers. It suggests that disabled people are a burden which should be imposed only on those who can afford it. As the noble Baroness said, disabled people are generally considered extremely reliable by those who employ them. Their employers are often very reluctant to let them go when they move to another employer or retire. In the United States, firms with fewer than 15 employees are exempt, while I understand that in both New Zealand and Australia all employers were included in the legislation from the beginning and there were no exemptions on the grounds of the size of a firm. I strongly support the amendment.

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