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Lord Hylton: My Lords, I should declare an interest as an employer of fewer than 20 people. It seems to me quite wrong that the Government should attempt to recruit small employers as unpaid, honorary immigration officers, just as it is quite wrong for the Government to recruit airline companies and ferry companies in a similar kind of role. Those companies which have considerable power and influence have a good deal of support on the Government Benches. I hope that the small employers will find just as much support on those very Benches.

Lord Renton: My Lords, I suggest that this amendment destroys itself on the information which has been given to us by the noble Lord, Lord McIntosh. He has pointed out that a vast proportion of the employers of this country are small employers; that is, with fewer than 20 people. Let us say that the average size of workforce of each of a thousand small employers is 10. If this amendment were accepted, it would mean that 10,000 immigrants would be breaking the law. It is an absurd proposition and I assume that the noble Lord would not dream of pressing it.

Baroness Blatch: My Lords, the worry I have with this amendment is that I believe the noble Lord probably

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wishes to press it. The noble Lord is condemned by what he said. He claimed that 97 per cent. of companies employed fewer than 20 people. That would mean that this clause would be worthless if the amendment were accepted. As I understand it, 97 per cent. of employers employ 50 per cent. of the workforce. If that is the case, a large percentage of the workforce would be exempt from the measures in Clause 8. A large percentage of companies--I would say the majority--would also be exempt. I certainly could not accept what the noble Lord says.

I may goad the noble Lord slightly when I say that this is a real problem. We have said there are about 10,000 people in the country who are employed illegally. We believe that is a serious problem. We cannot create an exemption thereby allowing that matter to go unheeded and allowing the racketeering to go unheeded whereby often vulnerable people are exploited and taken advantage of. We cannot allow that situation to go unchecked by the measures in this clause. There is a real difference between noble Lords opposite and those of us on these Benches in this matter.

The amendment seeks to restrict the application of Clause 8 to those who employ 20 or more people. The aim is to minimise burdens on those small businesses whose success is of course so important to our economy. I agree wholeheartedly with that. Small businesses are the backbone of economic activity in this country. We do not wish to increase burdens on those companies. To suggest that a P45, a national insurance number or a P46 are alien documents frankly defies my understanding of small businesses where staff have to grapple with tax returns, VAT returns and other documents. Those businesses recruit people properly. They would certainly be familiar with those documents. I suspect that they would deal with those documents on a day-to-day basis while recruiting people to their companies.

We agree that it is vital that the impact of any proposals affecting business are very carefully considered. That is why this Government have introduced a range of measures designed to keep the burden of government regulation to a minimum. It is also why compliance cost assessments are now being prepared in respect of regulations or other legislation which will involve costs to business. We believe that the financial implications of new measures for business must be understood.

We have made clear that a key part of any such consideration must be the effect any regulations will have on small firms. Will they be able to cope? Will the effects of new measures affect small firms disproportionately? In some cases consideration of these questions leads to the conclusion that small firms should be excluded from the scope of a measure. This is particularly likely to be appropriate where there are significant capital or other costs involved which would have an impact in a disproportionate manner on small firms. However, the fact that some measures properly exclude small firms does not mean that it is right or necessary to exclude them from all measures.

The proposals which we outlined in our consultation document and to which Clause 8 would give effect have, as we have made clear all along, been developed with

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an eye to keeping the burdens on all business to a minimum. Any burden imposed by our proposals will, of course, depend to a large extent on the scale and speed of turnover of staff. For many small businesses, with a stable workforce, any impact would in fact be pretty small and almost negligible.

It may be helpful if I provide an example. If a business has 12 employees and has a 25 per cent. turnover of staff in one year--that is quite a high turnover--checks of some sort will need to be made on only three occasions. If the new members of staff have normal, everyday documents as regards an employer, such as P45s, or otherwise documented National Insurance numbers--which is most likely--compliance costs would be absolutely minimal. They would be insignificant even if other checks had to be made.

We are of course concerned about the compliance costs of this provision. However, the responses which we received to our consultation document from organisations representing smaller firms do not lead us to think that the compliance costs for small businesses will, in the main, be anything other than minimal. Small business organisations chiefly emphasised the importance of clear guidance and welcomed the promise of a telephone helpline facility that could be called in case of difficulty. If a small employer is faced with an unusual document, help will be readily available. We will, of course, make every effort to ensure that the information and guidance which we provide are tailored to the needs of smaller employers.

However, we do not think it would be appropriate to exclude from the scope of this provision such a large proportion of employers. Estimates suggest that between 91 per cent. and 97 per cent. of businesses have fewer than 20 employees. These businesses between them employ millions of people. Any exclusion would clearly undesirably limit the effectiveness of the proposals. However, that, I presume is what noble Lords opposite want to do.

Lord McIntosh of Haringey: My Lords, the Minister has said firmly that there is a great difference between us on this amendment. I glory in that difference. That difference shows the extent to which the Government are now driven by dogma rather than by reason in dealing with immigration matters. The Minister queried our figure of 97 per cent. She herself said in Committee,

    "about 90 per cent. of companies ... employ five or fewer employees".--[Official Report, 2/5/96; col. 1825.]
That certainly squares with my figure of 97 per cent. which employ 20 or fewer employees. The Minister mentioned the response to consultations with representatives of small businesses. I do not know who they may be, but the Federation of Small Businesses wrote to me as recently as 21st June,

    "to add the support of the Federation of Small Businesses to your Amendment No. 68 aimed at exempting those employing less than 20 workers from the harsh penalty regime embodied in Clause 8 of the Asylum Bill".

The Minister and the noble Lord, Lord Renton, seemed to believe that the figures that I quoted about the importance of small businesses in the economy

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somehow negated the force of my argument. I say the contrary. I say that the fact that we can remove the threat of Clause 8 from all but 3 per cent. of employers in this country, while excluding only 35 per cent. of employees, is good value for money. I repeat what I said in my opening speech. By this modest amendment, we can reduce the requirement on the Government to consult employers by a factor of 100 to 3, while still excluding only 35 per cent. of employees.

The Minister seems to think that there is a known figure of illegal employees in this country. I thought she said 10,000, but I may be wrong. The number of illegal immigrants working in this country is an unknowable statistic. None of us knows because no one can or will answer the question if it is posed. It is a guess. It can be the Government's guess, my guess or anybody else's guess. I am willing to do more than guess. I am willing to assert that the vast majority of illegal immigrants working in this country--however many there may be in total--work illegally in more ways than one. They are not just working illegally in the sense that they are illegal immigrants; they are working for firms which almost certainly do not fulfil the other obligations of employers. Many will be domestic workers. No doubt the noble Lord, Lord Hylton, will return to that on a later amendment. The employers are people who are not collecting or paying PAYE; they do not observe all the other obligations on employers and they will not be affected by Clause 8, whether or not it includes such employees.

In resisting the amendment, the Government have missed an opportunity enormously to reduce the burden and only marginally to reduce the coverage of Clause 8. I think that they are mad. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

8.30 p.m.

Lord McIntosh of Haringey moved Amendment No. 69:

Page 6, line 34, after ("began") insert ("or within 2 weeks of the commencement of the employment").

The noble Lord said: My Lords, Amendment No. 69 refers to another practical issue which anyone who has been a small employer will appreciate. It is the requirement in Clause 8 that all the checks should be made and completed before employment commences. At Committee stage, my noble friend Lord Dubs moved an amendment which would have allowed a period of grace of two months between the start of employment and the completion of the immigration checks. We are more modest in the amendment today. We propose merely a period of two weeks. It means that the threat to the thrust of the Government's intention in Clause 8 is only marginally affected but, as with the previous amendment, the burden on employers is much less.

We are talking here mainly of small companies which have substantial numbers of part-time or casual labour who come in to fill a gap, to complete the need for a plumber, a bricklayer or whoever else it may be on a building site. They provide the small employer with the ability to complete an urgent order which cannot be

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completed by full-time staff. We must remember that the clause applies to all employees, not just full-time and long-term employees. Frankly, the idea that before filling a gap in the labour market, providing perhaps short-term employment, perhaps part-time employment, an employer should go through the checks which will be required by the regulations set out or envisaged in Clause 8 is ludicrous. The Government argue for flexibility in the labour market. This afternoon the Prime Minister came back from Florence and claimed that he had been protecting flexibility in the labour market by continuing his resistance to the social chapter. Here his own Government encourage the greatest degree of inflexibility with regard to small employers that I can imagine.

What is happening is that the Government have gone overboard for ideology and are determined to apply to all employers penalties which only arise because of a small number of employers, probably illegal themselves in other ways, who employ illegal employees.

I suggest that in Clause 8 the Government are using overkill. This modest amendment would in no way damage the thrust of what the Government want but it would make a huge difference to employers' ability to carry out their business without interference from government. One would expect to hear that kind of argument from the Conservative Benches. It is a shame that we do not hear it from either the Conservative Front Bench or the Conservative Back Benches. Who is on the side of small businesses? Who is on the side of industry? The answer is the Labour Party. I beg to move.

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