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Baroness Blatch: Like the noble Lord, Lord Addington, I shall be interested to hear the Government's response to the amendment. This is an extremely difficult issue. It would be helpful to know whether the Government have carried out any current work on cost-compliance because, if we are to make legislation in this way, it is important for us to know what the costs of meeting the obligations under the law would be for small businesses.

I am afraid that I am going to touch upon one or two statistics, even at the risk of being marginally longer in my remarks. The ballpark figures show that about 10 per cent. of companies in this country, which can be deemed to be large, do in fact employ a very large proportion of the population. However, something like 90 per cent. of all companies employ very few employees. Therefore, we are talking about a large number of companies but a smaller number of employees. I take the point about a level playing field for employees; indeed, it is a very powerful point.

I have two further comments to make about small employers. The noble Earl, Lord Russell, touched on a very important point as far as concerns small employers; namely, the fact that they do meet their employees face to face on a daily basis. It has always been my view that, rather than being very critical of them, employers are very often extremely sensitive to the needs of their employees and, in a wholly voluntary capacity, do in fact go a long way towards meeting their needs, including the needs of the disabled.

We are about to embark on the setting up of a commission. I think it would be wise to do two things: first, we should continue talking to employers about the degree to which they are able, in a voluntary capacity, to meet the needs of disabled employees. Secondly, I also believe that with the advent of the commission there should be an increased impetus that will actively work with employers right across the board, whether or not they have an obligation under the law, to help them meet their obligations more and more. The obligations for many companies will be legal. The obligations in respect of employers with fewer than 15 employees will not be legal obligations; nevertheless, there will be a moral obligation to do the best that they can for their employees.

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At the end of the day we cannot get away from the fact that the choice for a small employer, especially a very small employer--that is, one employing three to half-a-dozen people--may well be a matter of survival. It may not be a question of whether or not he can meet all his obligations under the law. The heavy hand of the law can be pretty inflexible and unremitting. It may mean that some employers will be unable to meet the costs involved with the arrangements for disabled employees, which may not be perfect but which, nevertheless, allow them to go to work and to hold down a job with their needs being met as far as possible by the employer. Indeed, the cost to some employers of meeting such obligations under the law may be beyond their ability. In that case, as I said, it may be a question of survival.

I believe that we must be somewhat cautious in going down this road without greater consultation with employers. We must also give the commission the opportunity to work with employers to help them meet the needs of the disabled, without necessarily resorting to the heavy hand of the law in the case of very small employers.

Lord Hamilton of Dalzell: I agree absolutely and entirely with what my noble friend has just said. I believe that small firms do employ disabled people, but they do so because they are enlightened and have goodwill, not because they are compelled to by law. When we were discussing the 1995 Act, I questioned how one actually manages to corner someone for discrimination as regards not employing a disabled person. For example, there may be half a dozen prospective employees sitting in a room, one of whom has a disability. If the employer knows the law, I have never been able to understand how he can be accused of discrimination. Of course, if he turns round and says, "We don't employ people with disabilities here", he will find himself in court. However, if he simply says, "I think that there is a most magnificent collection of candidates here; you all have marvellous qualifications, but I think that A fits the bill better than B"--who may have a disability--I do not understand how he could be accused of discrimination.

I wonder whether we are going to have something like the process suggested to me by an American. He told me how they do it there. Apparently, one looks around a whole collection of firms and if, for a number of years, some of them never employ a person with a disability, you prosecute them. That would be totally undesirable. I have never been able to understand how this works. Perhaps the Minister can explain it to me.

Lord Rix: Following on from what the noble Lord has just said, I have one question to ask. I am inclined to agree with him. I do not believe that small employers are forced to take on disabled people just because they are disabled. Surely there is no positive discrimination in any part of the legislation. When people are in front of you seeking a job, you have a choice and you take the best person available. If that person happens to be disabled, so be it. However, you make that choice at the time. If you discriminate against that person because of

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his disability then, as the noble Lord, Lord Hamilton, pointed out, you would be contravening the Act. If there were six equal people in front of you, you would have the choice of one of them. Am I not correct in so thinking?

Baroness Blackstone: I should like to begin by responding not to the point that the noble Lord has just made but to the tongue-in-cheek comment he made earlier. I shall certainly be delighted to draw the similarity in drafting to the attention of parliamentary counsel. I have to say that, in practice, the effects of this amendment would be ambiguous. However, I am sure that the purpose of the noble Lords, Lord Ashley, Lord Addington and Lord Swinfen, in tabling the amendment was to try to encourage the Government to reduce the small employers' threshold without waiting for the DRC to be established.

The Government's aim is to ensure comprehensive rights for disabled people. In response to the comment made by the noble Lord, Lord Addington, I should point out that we are of course sympathetic to the idea that smaller firms should be covered by the DDA's employment provisions. I think the noble Lord spoke a little unfairly and seemed to suggest that we had done absolutely nothing in this respect. In fact, we lowered the threshold very soon after coming to office. Where we differ from those who attached their names to the amendment is largely in the timing of such change and how we ensure that it is effective.

The Government believe that effective rights for disabled people can best be achieved with the support of business. The noble Baroness, Lady Blatch, said that we need actively to work with employers. I strongly agree with her. It is not in the interests of disabled people if employers try to avoid employing or retaining disabled people because they misunderstand the issues or fear the consequences of the law. Again, as the noble Baroness said, the disability rights commission itself has a very important role to play both in advising us and in improving awareness among employers. That is, I am sure, an objective that we all share.

The Committee will recall that the reduction we made in December from 20 employees to 15 was not insignificant. I believe that it was an important step forward. It has widened the coverage of the employment provisions of the DDA to bring in 45,000 more employers with around 800,000 employees, any of whom might need protection in the future and 70,000 of whom are currently disabled. All disabled applicants for jobs in these firms are now also covered. In all, over 75 per cent. of disabled employees are now covered by the DDA's employment provisions.

That does not mean that we think enough has been done, and I recognise how strongly people who have campaigned on this issue for so long, including Members of this House, feel about it. It does mean, however, that we want to avoid going too far too soon. It also means that we intend to involve the commission on this issue, which seems entirely right given that we are establishing it in part to advise us on reviewing the working of the DDA.

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I am pleased to say that many small firms already employ disabled people. However, many do not and many do not know as much about disability as larger firms, nor always how to respond effectively to the needs of individual disabled people. We have to deal with the situation as we find it and I think we would be foolish to assume greater understanding of the issues than is the case.

It has been argued in the debate that the concept of reasonableness protects small employers. The Committee will recall that the DDA places a duty on employers to make reasonable adjustments in certain circumstances which might help disabled people get or keep jobs. This might involve changes to their employment practices or their premises in a range of ways.

Clearly "reasonableness" is likely to go a long way to ensuring that small employers are not unfairly burdened. But we need to find out more about how the courts and tribunals are interpreting the concept of reasonableness to help us inform and reassure these small employers. At the moment, for example, early evidence from research, which we hope will be published in the spring, is that there was concern about what might count as reasonable among employers who were asked. These employers are those who have been covered by the DDA since December 1995. There was an expectation among such employers that case law would probably make the position clearer over time but also a belief that more guidance was needed despite a detailed code of practice. Guidance is one of the things which the commission will be able to provide.

We have to help improve the situation for disabled people, but I am not sure that the right way is to have the very smallest employers simply learn by trial and error how this law applies to them and their disabled employees and recruits. Such employers do not generally have specialist personnel who can devote time and expertise to dealing with some of these issues. I know that some small firms and their representative organisations are concerned about the consequences of making relatively small mistakes but paying a heavy price at an employment tribunal. Legal costs, even if an employer is in the right, can be large.

Of course, disability issues are often fairly straightforward, particularly if the employer is sensible enough to ask the disabled individual about what might be needed. As regards what my noble friend Lord Morris of Manchester said, I certainly would not want to give the impression that disability is a problem for employers, nor that employing disabled people is an expensive issue.

The noble Baroness, Lady Blatch, asked about compliance costs. The cost of lowering the threshold further is not huge when spread over all the employers concerned. Our consultation document suggested that it might cost employers an extra £2.7 million had the threshold been lowered to its minimum of two. However, in practice, as I am sure the noble Baroness had in mind when she spoke earlier, the costs are not spread evenly but fall unevenly on individual employers. Much of the extra costs are legal costs and it

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is those which understandably concern small employers, who fear that they may be the ones who face the cost of having in some cases made an unintentional mistake.

The Employment Service will continue to provide specialist help to employers wishing to take on or keep disabled employees, although it cannot give advice on the law; but the DRC will also help to ensure that there is appropriate awareness-raising and provision of information and advice.

We have already begun the process by improving the DDA helpline. It provides an increasing range of information on the DDA and can now assist business and others with queries about employing disabled people by helping them make contact with specialist organisations. I am pleased that so many voluntary organisations have joined with us to make this system work. My honourable friend the Minister for disabled people is also developing a communications strategy, in co-operation with the National Disability Council and disability and employer bodies, to help ensure that small businesses and others are more informed and aware. We are also undertaking a range of research which will help us further inform and reassure business and underpin future decisions concerning small employers.

In response to the question of the noble Lord, Lord Hamilton, where the DDA is not clear, case law will establish uncertain points. I am confident that our courts will never resort to resolving such issues by counting up total numbers of disabled employees.

In the ways that I have set out, we are trying to establish a climate in which the DRC can look positively at whether the time is right for further change and we are building up evidence to ensure that any change is effective. On that basis, the Government consider that they should wait for the establishment of the DRC before considering when and how the threshold should be lowered. Recognising how strongly my noble friend feels about this, I hope that in these circumstances in the light of what I have said, he will feel able to withdraw his amendment.

7.15 p.m.

Lord Ashley of Stoke: I do feel strongly, as my noble friend said. This has been an extraordinary debate. I am very disappointed with the noble Baroness, Lady Blatch; I am astounded at some of the points she raised. I am also disappointed with my noble friend the Minister. The noble Baroness, Lady Blatch, said that small businesses are sensitive to the needs of their workers. I do not see how she can generalise in that way. Does she mean all small businesses? We are not concerned with those who are sensitive to the needs of their workers. Good luck to them; we all support them. We are concerned only with those who are insensitive. Unless the noble Baroness can prove to the Committee that all small businesses are sensitive, there is a need to tackle the minority--admittedly, it is a minority--of small businesses which are insensitive. That must be taken into account.

Someone mentioned moral obligations. That is wonderful language and a fine and noble concept, but we do not guarantee a defence against discrimination by

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moral obligations. We are concerned only with those small employers who do not care about moral obligations and are prepared to discriminate.

It is said that small employers want to act voluntarily. That again is a great philanthropic attitude. I support and applaud those small employers who want voluntarily to avoid discriminating against their workers, but we must take into account the small minority.

My noble friend talked about timing. I do not see that timing is relevant; it is utterly irrelevant. All we seek to do to implement this change is to enable the Government to include practically all small employers in the measure, apart from those with fewer than two workers. That is all we seek. Where is the problem as regards timing?

As regards difficulties of small employers, I repeat that it is not possible for any barrister, solicitor or judge to say that unreasonable burdens can be imposed on small employers. The Disability Discrimination Act specifically states that only reasonable accommodation must be made. Therefore it is not possible to establish a ruling in the courts that unreasonable burdens will be imposed.

My noble friend also referred to the concept of going too far too soon. I am prepared to forgive her for that as it is the first cliche she has used in two hours of debate. Therefore I shall let her get away with that. But why are we going too far? We are simply asking small employers not to discriminate. What is unreasonable about that? What is so horrific in that for small employers? What is horrific about not discriminating against disabled people? We are not asking for the moon. We are simply asking for fairness and, to mention a high-flown concept, justice.

I am afraid that my noble friend has let us down today. We cannot accept that because Margaret Hodge and her colleagues are discussing a communications strategy and research, that is the answer. That is not the answer. We welcome a communications strategy and research, but what we want basically is a defence for disabled people against those small employers who are prepared to discriminate against them. However, as my noble friend will obviously consider this matter, lose much sleep over it, and try to come back on Report with a positive suggestion, I beg leave to withdraw the amendment.

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